National investors are having a difficult time, keeping their hands off the 'Madras mix'. Locally well-known companies that are listed on the Madras Stock Exchange (MSE) for long but have just started to be traded on the National Stock Exchange (^NSEI : 5473.5 +34.25)'s (NSE) platform, are showing good amount of investors interest.
Going forward, market observers expect more companies to debut on the national bourses, as national exchanges are aggressively scouting for tie-ups with regional stock exchanges (RSEs).
The lacklustre volumes and share price movements at the MSE have given way to encouraging volumes and occasional price spurts at the NSE. Moreover, starting today, nine more companies would be on the national platter. Best & Crompton Engg, Bodhtree Consulting, Empee Sugar and Chemicals and handful of textile companies are among those permitted to be newly traded on the NSE. Some of these companies, for instance Best & Crompton Engg, have a long track record. Best & Crompton Engg, which was founded more than 100 years ago, reported a net profit of Rs 54 crore in 2008-09 on an income of Rs 164 crore.
In 2009, NSE signed a memorandum of understanding with MSE, allowing companies listed on their exchange to get traded on the NSE platform - provided they meet the minimum eligibility criteria. The agreement also allowed MSE members to directly access the NSE trading platform. Since then close to 40 companies listed on MSE have been admitted for trading on the NSE platform.
"Some of these companies have very good track record in terms of professional management and profitability," said Mayank Shah, CEO, Anagram Stock Broking. "Since these companies keep a very low profile and operate locally, they were never able to explore the capital market at the national level," he said. However, with shares of these companies with considerable reputation in their regions being permitted to be traded on NSE platform, they are getting the deserved recognition and is creating the much needed value for its shareholders, he added.
The shares of Manappuram General Finance and Leasing, a Thrissur based non banking finance company (NBFC) known for its gold loan initiatives clocked an average daily turnover of Rs 6.60 crore in the past one month. And in the month of august its daily turnover shot up to Rs 20 crore. Its share prices are up 50% since start of July. This company is also listed at Bombay Stock Exchange (^BSESN : 18250.98 +106.99) (in addition to MSE).
Another Chennai-based ayurvedic major Amrutanjan Health Care, best known for its pain balm, generates an average daily turnover of Rs 4.2 crore at NSE. While its share price hasn't moved much in recent times, it seems to have the qualifications for being a 'good midcap' stock. It reported a profit after tax of Rs 12 crore on a net sales of Rs 90 crore in 2008-09. Other south based companies like Amarjothi Spinning Mills, Elnet Technologies, Jumbo Bag and Panasonic Carbon India Company are also witnessing good amount of traded volume with around 50,000 shares changing hands on a daily basis on the NSE trading platform. Over the last month, with large cap indices teetering at higher levels, there has been considerable interest in mid and small cap stocks like the ones mentioned above.
People in the know say NSE is in various stages of discussion for signing MoUs with other regional stock exchanges including Jaipur Stock Exchange (JSE) and Madhya Pradesh Stock Exchange. BSE already has a tie up with Calcutta Stock Exchange (CSE), in which it has 5% stake. And it is looking for similar agreements with other regional exchanges.
Apart from infusing liquidity in to these shares, these agreement will also help national exchanges garner market share as it improves overall traded volumes and attract new trading members into their fold. Currently there are 14 Sebi recognised RSEs having a total of over 4,000 members. Exchanges like Cochin, Bangalore and Madhya Pradesh among few others have floated their wholly owned subsidiary through which its members access BSE's and NSE's trading platform. While the overall turnover of all the regional exchanges are not known, daily trades on the national exchanges by members of regional exchanges is pegged at Rs 1,500 crore, according to industry observers. This is roughly 6% of the overall cash market and 1% of the overall turnover(including derivatives) at both the national exchanges of BSE and NSE.
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