NIIT Technologies
Cluster: Ugly Duckling
Recommendation: Buy
Price target: Rs690
Current market price: Rs442
Stake sale to unlock value
According to media reports, the promoters of NIIT Group are looking to sell the 25% stake in NIIT Technologies (NIIT Tech) that is currently held by NIIT Limited. This much-awaited trigger in the stock is likely to unlock value for the shareholders, as the transaction is expected to be negotiated at a significant premium to the prevailing valuations.
State Bank of India
Cluster: Apple Green
Recommendation: Buy
Price target: Rs1,780
Current market price: Rs1,556
Taking steps in the right direction
Key points
SBI has decided to merge State Bank of Saurashtra: The State Bank of India (SBI), the country's largest commercial bank, has kicked off the consolidation process with its associate banks. It has decided to merge the State Bank of Saurashtra (SBS), an unlisted wholly owned associate bank, with itself. The boards of both the banks have given an in-principle approval to the merger proposal. The SBI will now have to get approvals from the Government (which holds 59.7% stake in SBI) and the Reserve Bank of India. We feel the SBI chose the SBS to begin the consolidation process, as the SBS is the smallest among the SBI's subsidiary banks and due to the ease of getting the regulatory approvals as the SBS is completely owned by the SBI.
First signs that SBI is serious in restructuring its subsidiaries: The SBI-SBS merger has been lingering around for many years without any concrete action on the ground. The merger process was slowed down mainly due to political hindrances and regulatory hurdles. However this time things are really looking bright as the formation of a holding company is in the pipeline and the merger process is already initiated.
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