Promoters of VEDANTA have once again come out with an open offer for share buyback. This is the third time that promoters have come up with an open offer to delist the company, but this time the offer price has been increased to 235. The question arises that in this offer whether you should tender the shares or not, we will talk about it. Motilal Oswal’s Hemang Jani and our colleague Yatin Mota have joined CNBC-Awaaz in this special show.
On March 16, Vedanta Resources raised the price of the open offer of its shares to Rs 235 per share. Explain that the company had made an open offer to buy 10 percent of its shares at the price of Rs 160 per share. That is, the new offer price is about 4 percent more than the old offer price.
VEDANTA OPEN OFFER
Yatin said that the company has offered to buy 17 percent of the shares at Rs 235. This offer is open today i.e. from 23 March to 7 April. This is seen as an attempt to buyback and get the company delisted.
Promoters hold 55.11 percent stake in the company. On the other hand, LIC holds 5.58 per cent, Vanguard 1.58 per cent, Blackrock 1.45 per cent and Charles Schwab 0.32 per cent.
Opinion of Emkay Research
Yatin said that on this offer of the company, Emkay Research estimates that its Minimum Acceptance Ratio can be 49 percent and Potential Acceptance Ratio 64 percent. If the final acceptance ratio is 65 percent and the price after the offer is Rs 220, then Arbitrage Return can be +2.75 percent on this offer.
Vedanta had earlier made an open offer in October 2020 at a price of Rs 87.5 per share. Promoters had bought 4.98 percent stake in it. In this, the promoter bought shares at a price of Rs. 160. After this, in January 2021, an open offer of 10 percent shares was made. In this, an open offer was given at a price of Rs 160 per share. Now the company has made an open offer of 17 percent shares in March 2021, although this time the price of open offer has been increased to Rs 235.
LIC’s view on VEDANTA
LIC valued its shares at Rs 320 in the October 2020 offer. Explain that LIC is the largest shareholder in the company with 5.58 percent share. The promoters stake was 50.14 percent in September 2020, while in December 2020, the stake increased to 55.11 percent.
MOFSL’s Hemang Jani Opinion on Open Offer
Hemang said that the way promoters are increasing their stake in this company and the way promoters are showing for the past 3 to 4 months. Looking at it, it seems that it may bounce further. Its price can go up to 250. Therefore, you should not give your shares in this open offer.
Hemang further said that such a company does business in a sector where the environment has improved in the last two sessions. In its earlier open offer, it was offered a price of 160. Now the promoters are ready to take it to 235, which means they think the future is good. There may be good pace ahead in this. Therefore, investors should not give their shares in this price.
Explain that the company is expected to benefit significantly in the long term from the medium with increasing investment in the infrastructure and power sectors by the Government of India and focus on Make in India.
In such a situation, investors should keep all these things in mind before the share tender in this offer. But other experts of the market say that since the offer price of this time is quite good. Therefore, short-term investors can tender their shares in this offer if they wish.
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