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Rediff.com  » Business » Change name and see stock price rise

Change name and see stock price rise

December 10, 2007 10:19 IST

In the eighties, adding the word 'Leasing' to your company's name usually assured good stock market valuations. In the mid-nineties, it was '.com' that worked and, for a while, 'Biotech.'

In 2007, the magic words are 'Infra,' 'Power' and 'Realty.' Or so a host of companies have discovered.

Companies that have added these suffixes to their names have seen their share prices move up between 50 and 200 per cent in the past six months.

Consider this. The BSE Capital Goods Index has jumped 120 per cent this calendar year and the BSE Realty Index rose 57 per cent since its launch in July.

Small wonder, then, that Pan Packaging Industries became Alchemist Realty, Anna Finance metamorphosed to Anna Infrastructures, Prerna Finsafe to Prerna Infrabuild and Simplex Mills is now Simplex Realty.

Other companies that have adopted these new business models include Peerless Absam Finance, which is now Shristi Infrastructure Development Corporation, Insul Electronics, which became Sunteck Realty, and Ritesh Industries, which is now Ritesh Properties and Industries.

To take advantage of the energy business, XL Telecom has changed its name to XL Telecom & Energy, Genus Overseas Electronic has changed to Genus Power Infrastructure, Jhantla Investments is now Veer Energy & Infrastructure and Osian LPG Bottling is Nova Gold Petro Resources.

The other in-vogue suffix is 'Industries,' which brokers said might have something to do with Reliance Industries' valuations.

Companies that have applied 'Industries' to their names recently include Premier Tyres (now PTL Industries), Jai Balaji Sponge (Jai Balaji Industries), Q-Flex Cables (Cablex Industries), Gujarat Apollo Equipments (Gujarat Apollo Industries Ltd) and Salguti Plastics (Salguti Industries).

The name change or the so-called restructuring in business model has triggered a surge in shares of some of these companies.

Alchemist Realty is trading at its all-time high of Rs 678 and has risen by over 300 per cent since it announced a name change.

Similarly, XL Telecom & Energy saw its stock advance nearly 300 per cent after it changed its name in July this year.

Sunteck Realty is quoting at Rs 1,810, having risen 209 per cent in the past six months since the market heard about its name change plans.

According to stock exchange rules, companies that have been rechristened have to publish their old names in all advertisements or company notices.

"But no one follows this rule and no one pulls them up," said a former Securities and Exchange Board of India member.

Palak Shah in Mumbai
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