IN TO THE MIND OF VEDANTA’S FOUNDER AND CHAIRMAN, ANIL AGARAWAL
As many of you might have heard in news or from your friends and family about the delisting of Vedanta Ltd. In this article, we shall explore in brief what is the meaning of delisiting, why delist and a gaze in the mind of Vendanta’s Founder and Chairman, Anil Agarawal.
THE NEWS:- On May 18, the board of Vedanta approved the delisting of the shares at a floor price of Rs 87.25 per share. However, the final offer price for the delisting proposal will be determined by the reverse book building mechanism set out in the delisting regulations.
Simply put, delisting is the removal of a listed stock from a stock exchange. Delisting, which can be voluntary or forced, renders stocks unavailable for trading at the bourses.
Figuring out the possible reasons to delist-
The market price of the stock is not reflective of the firm’s true value. Which may send wrong signals to potential investors, or even bankers, making it tough for the firm to raise funds.
There is a possibility that private equity investors have proposed to buy a stake in the firm at a value higher than the secondary market.
Trading volume, on the other hand, says a different story. On a YTD basis, trading volumes of the stock have seen a massive jump on the BSE. While traded volume for Vedanta has seen 279 percent jump, ACE Equity data show.
Promoters are opting to delist, and not buyback shares, right now is primarily because of the cheap value at which the shares are available. Buyback works only for a couple of months, but if the market scenario looks weak for a considerably longer duration, it makes sense to delist. Also once delisted, the fixed assets and liquid assets will be under promoters’ control and they would not be bound by obligations set by SEBI for any business decision in the future. (A buyback, also known as a share repurchase, is when a company buys its own outstanding shares to reduce the number of shares available on the open market.)
The current trend of delisting is a classic case of a bear market. Promoter groups are eyeing public stake in their firms as stock prices have fallen tremendously from their peaks. Add to it depreciation of the rupee, by about 15 percent YoY, the promoters may find great value in dollar terms in case they sell their stake to global Private Equity players.
I personally feel that it is just a masquerade being put into motion by the Promoters and the Master Mind “Anil Agarwal” to set a market floor price at Rs 87.25. Want to know Why? click here
This article houses my opinion and if find any thing to be not understandable and violating to you, just drop a comment. And if you like the article, drop few claps here and there.
