Singapore-based Nalanda Capital has increased its holding in construction firm Ahluwalia Contracts (India) Ltd to 11.25 per cent, bringing down the average cost of its purchase. Over the past three weeks, Nalanda acquired more than 2.2 per cent stake in the firm for Rs 10-12 crore, as per VCCircle estimates. It also picked up over 2 per cent stake during the October-December period in 2011, according to BSE data.

Nalanda Capital, headed by former Warburg Pincus India MD Pulak Prasad, currently manages over $875 million across two public market-focused funds for India. In the recent months, it has been increasing its holding in a number of existing portfolio companies like IT consultancy services firm MindTree Ltd, battery maker Exide Industries, precision castings maker Ratnamani Metals and Tubes and plastic products manufacturer Supreme Industries.

Shares of Ahluwalia Contracts were trading at Rs 80 a unit at 12:28 pm on the BSE, up 2.5 per cent.

With the latest round of share purchase, Nalanda Capital is averaging down its entry price in the company. Nalanda first picked up the stake in the firm in December 2010, when its scrip crashed to around Rs 135 a share. At that time, the company was allegedly involved in payment irregularities related to some construction work at the Commonwealth Games Village. Interestingly, it later turned out to be the epicentre of multiple scams.

For Q3 FY12, the revenue of Ahluwalia Contracts fell nearly 6 per cent to Rs 357 crore and the company reported a loss 16.76 crore, compared to the net profit of Rs 14.14 crore during the same period last year. The company had also seen a decline in order inflow and missed its targets.

“The management had guided for an order inflow of Rs 2,600 crore for FY12E but has bagged only Rs 810 crore in 9MFY12 with Rs 140 crore worth inflow in Q3 FY12. We have cut our order inflow assumption for FY12E to Rs 1,200 crore,” a report from Marwadi Shares & Finance (MSFL) stated and cited a sell rating at Rs 66 per share.

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