Reliance Communications drops after large acquisition buzz

Reliance Communications drops after large acquisition buzz

Reliance Communications was down 1.68% to Rs 599.50 at 10:08 IST on BSE, following reports that the company is looking for a possible takeover of French IT services group Capgemini.

Meanwhile the BSE Sensex was down 152.84 points or 0.85% to 17,611.80 on weak cues from the global markets. US stocks dropped on Thursday, 14 February 2008, as the credit crunch surfaced unexpectedly in the municipal bond market and after the Federal Reserve Chairman Ben Bernanke said that he sees sluggish economic growth ahead.

On BSE, 1.25 lakh shares of the scrip were traded. The stock had an average daily volume of 17.57 lakh shares on BSE in past one quarter.

The scrip had touched a high of Rs 605 and a low of Rs 595 so far during the day. The stock had hit a 52-week high of Rs 844 on 10 January 2008 and a 52-week low of Rs 371.25 on 16 March 2007.

The large-cap scrip had underperformed the market over the past one month till 14 February 2008, declining 16.66% compared to the Sensex’s decline of 10.58%. It also underperformed the market in the past one quarter, declining 13.85% compared to Sensex’s fall of 9.81%.

India’s second largest listed telecom firm by sales has an equity capital of Rs 1032 crore. Face value per share is Rs 5.

At the current price of Rs 599.50, the scrip trades at a PE multiple of 70.86, based on Q3 December 2007 annualised EPS of Rs 8.46.

As per reports, Reliance Communications is interested in building a significant IT business and acquisition of Capgemini would give it access to a client base in continental Europe and catapult it among the world's top ten IT groups by market share. The media reports said that both Reliance Communications and Capgemini declined to comment.

Reliance Communications' net profit fell 43.4% to Rs 436.48 crore on 11.8% rise in sales to Rs 3403.52 crore in Q3 December 2007 over Q3 December 2006.

Reliance Communication provides telecommunication services. The company provides wireless, wire line, voice, data and Internet communication services.