Update on Narmada Chematur

I have got few queries from the readers of this blog to provide an update on the Investment Idea given in July on Narmada Chematur Petrochemicals Ltd (NCPL). The request was in view of the fall in the stock price pursuant to the news that NCPL will be merged with its parent company GNFC.

You can re-read the article on Investment Idea by Clicking Here

The stock was recommended at a price of Rs. 38 with a time frame of 12 Months and a target of Rs.70
The stock reached a high of Rs. 49.85 after the recommendation , however, fell down to Rs. 34 after the news of the merger.

GNFC is the promoter of NCPL and if the company is mulling a merger of NCPL to itself, I do not see it a s a setback to NCPL. Also, the announcement says that a merged possibility is being explored. Since the idea is at its initial stage , it would be difficult to predict what the management finally decides and what will be the swap ratio for the merger.

Looking at GNFC, with whom the company is getting merged, the financials looks good. The company has posted a 40% jump in the net profit in Q2 of this year. Even NCPL has registered good results. At this stage, Investment Guru is of the view that the merger may create synergies for GNFC and in turn should be eventually good for the shareholders.

However, it terms of share prices, a lot depends on the swap ratio for the merger.

Investment Guru is of the view that investors should hold on to the stock and watch for further developments in terms of the merger. The blog will keep you updated with any change in the outlook for the stock based on further developments. A new target price would be published on the blog once further visibility comes to the development on merger.

Happy Investing !!