Share Bazaar: Worried about Vedanta's delisting? Market guru Anil Singhvi has this valuable tip for investors
Vedanta Resources and promoter group companies have moved a proposal to delist Vedanta Ltd from the Indian stock exchanges, it has said in an exchange filing. How investors will see it and what impact will the development have on the price of Vedanta stocks is a question everybody wants to know about. Zee Business Managing Editor and market Anil Singhvi unravels the mystery for the investors
Vedanta Resources and promoter group companies have moved a proposal to delist Vedanta Ltd from the Indian stock exchanges, it has said in an exchange filing. How investors will see it and what impact will the development have on the price of Vedanta stocks is a question everybody wants to know about. Zee Business Managing Editor and market Anil Singhvi unravels the mystery for the investors.
Anil Singhvi said that the market had the idea yesterday itself about some big development likely to happen. This was the reason why Vedanta stocks ended up 12 per cent on Tuesday, despite the overall market ending in the red. This big development has come in the form of a proposal to delist the company, Singhvi said.
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The offer price is at Rs 87.5 per equity share. The question that investors have been putting is if the company can be allowed to delist at such a low price. Singhvi said that legally Vedanta is allowed to do it as SEBI guidelines allow a company to give indicative price as per market regulator's formula. The board will be meeting on 18 May to decide on this.
Singhvi said that the delisting can happen only if the investors give their consent. The company and the board cannot do it unilaterally. The minority shareholders have around 50 per cent share in the company while the rest is with the promoters, he explained.
Singhvi said that he expects that on 18 May when the board meets, it would come out with a better offer. The book value of the stock is between Rs 175 and Rs 180 and to delist it at half the price is not the right thing. He expects the delisting offer to get failed.
What should retail investors do?
Singhvi advises investors to not participate in the delisting process at this price. He said that these shares belong to the minority investors and it is upon them to sell it or not. If the investors don't give up their shares, the delisting process may not go ahead. The necessary condition for a successful delisting is that at least 90 per cent shares should come. Only 50 per cent is coming from promoters. The company will still need 40 per cent shares.
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He said that the local funds like LIC, mutual funds will not sell the shares at this price. If Vedanta wants to delist then it will have to offer premium. He advised the investors not to worry.
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