Singer India - Fray Stiching

Singer is synonymus to sewing machines. Singer India, being a Dutch subsidiary, makers of Singer Sewing Machines, are also making Kitchen, Home and Large Applinaces, with Dutch Promoter holding 58.99 % stake, through its Indian arm Retail Holdings (India) B.V. (RH India). Last week, parent of RH India divested 42% stake in RH India, to an international private investor. This implies that 24.78% effective stake of Singer India has been acquired by this investor, thus not trigerring an Open Offer.

Q2 FY 21 numbers of Singer was quite good, on QoQ and YoY basis both, with debt free status, with BV per share at Rs.12.27 (FV Rs. 2) with cash of Rs. 33 cr. being Rs. 6 per share. Also, Home Appliances sector saw good demand recovery of the products, making share price of  these companies move higher in last 3-4 months. Even share price of Singer rose to 52 week high on 16th Dec. after Promoter stated of transferring this 42% stake on 15th Dec.

But analysts and gullible retail invesotrs lap up such news, believing them always to be positive for the stock, but eventually seen landing up in losses, or stuck with share bought at higher rate. Similar may be the case here, as share price may see fall now, while new investor, even if raises his stake, will do at much lower rate, with open offer. Even PE multiple will fall now, with MNC promoter seen becoming a joint promoter.

So, lesson is not to jump to buy on each news. Because, nowadays Copper (read Hind Copper) glitters more than Gold:)