Photo: BloombergThe merger of Hinduja Foundries Ltd (HFL) with the group’s flagship firm, truck maker Ashok Leyland Ltd, did not go down well with investors. Ashok Leyland’s stock closed 3.6% lower at Rs81.55 over concerns that it would impact near-term profitability. The main worry is that Ashok Leyland had just started showing robust revenue growth, and a sustained rise in profits and profitability over the last two-three years. Naturally, this would hold back upsides in Ashok Leyland’s stock in the near term, until the stated benefits from the merger pan out for the company. Meanwhile, HFL’s stock plunged 20% to close at Rs44, as the merger ratio implied that the market price was far greater than its intrinsic value.

Source: Mint September 15, 2016 17:48 UTC