Vedanta - Delisting

#1
Delisting of Vedanta has been announced at proposed price of 87.5.

I have holding at avg rate of 115, what should I do? Should I wait for their formal propose price? or Should I book loss at current prices which is bit higher than the proposed delisting price?
 
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Alchemist

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#2
No need to book a loss.

If the promoter is serious about delisting, the final offer price will be much higher than the current price.

The 26 week average price is somewhere around 118. Delisting can't happen below that price.
 

Alchemist

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#3
3. What is the exit opportunity available for investors in case a company gets delisted?

SEBI (Delisting of Securities) Guidelines, 2003 provide an exit mechanism, whereby the exit price for voluntary delisting of securities is determined by the promoter of the concerned company which desires to get delisted, in accordance to book building process. The offer price has a floor price, which is average of 26 weeks average of traded price quoted on the stock exchange where the shares of the company are most frequently traded preceding 26 weeks from the date public announcement is made. There is no ceiling on the maximum price.
https://www.sebi.gov.in/sebi_data/docfiles/20626_t.html

I am not sure if the above rule is the latest one, but whatever the new rule is, it is likely to consider some kind of average price.

Promoters can't just delist at prevailing market prices - else all companies will delist in bear markets and relist in bull markets at much higher prices. :).
 
#5
At this time the promoters hold only ~50%,they will need to buy 40% more shares to be successful with delisting.

For delisting there will be a reverse book building process where shareholders will decide the price at which they are willing to tender their shares, then the company can accept or reject the same.

I don't think anyone will be willing to tender their shares at less than 150, the fair price would be at least 200+.
 
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#6
Board has approved the delisintg and set the same 87.5 Rs per share price. Rumours spreading is that Vedanta might internally convince (under the table settelment) DIIs and FIIs at 87.5 on paper. And they might be successful in acquiring the required shares for delisting. We retail investor would be at risk.
 
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Alchemist

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#7
Board has approved the delisting and set the same 87.5 Rs per share price. Rumors spreading is that Vedanta might internally convince (under the table settlement) DIIs and FIIs at 87.5 on paper. And they might be successful in acquiring the required shares for delisting. We retail investor would be at risk.
That is difficult to achieve.

A large chunk of the shares are with mutual funds and insurance companies. If they throw away the shares at cheap valuations, it will create a big uproar.

Just LIC has over 6% stake.

Private DIIs can be convinced by under-table deals, but those investing public's money may not get involved in such deals.
 
#10
The delisting has been approved. Now to wait for the reverse book building price
Delisting approved? Does it mean all shareholders agreed on Rs 87.5 per share delisting option or just for delisting without considering the price offered? They will wait for the new price (reverse book building price)?

By when Vedanta will announce the price. Earlier they said 87.5 per share. What price they will consider for delisting?

Ideally it should be 140-150 per share.
 
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#11
Nope it simply means they have approved that this share can be delisted.

On the price, commodity stocks are at bottoms and will only go up from here.

Hindustan Zinc, in which Vedanta owns 65% has declared a dividend. Vedanta share of this dividend is 4500 Cr for a company (Vedanta) trading at current market cap of 40000 Cr.

So about 11% of current trading price is Hindustan Zinc dividend. So if you hold this stock for 9 years, you will get 100% value of your Vedanta shares only from Hindustan Zinc dividend.

Again they like I mentioned they own 65% of Hindustan Zinc. HZL itself is valued at 83000 Cr, 65% of that is 120% (53k Cr) of Vedantas mcap.

By these assumptions the value of Vedanta without delisting is about Rs 230. Now lets factor in Mr Agrawal wanting to take it private. That will mean another 50% more value at least for giving him the privilege of owning the company and all future dividends from both Vedanta and HZL. So about 330 to 350 per share is fair value.

Vedanta also usually declares a dividend of 8% every year themselves which I haven't accounted. Neither have I accounted for the value of their own business.

Vedanta has also declared heavy losses this year of Rs17k Cr as Covid impairment to the business again probably to suppress the share price. This is not actual impairment mind you, just what they assume due to Covid.

I expect them to delist it successfully anywhere between 250 to 350 per share if they actually want to do it and not just increase the share price.

A Lot of retail investors have come into this company by buying Sesa Goa shares and were screwed over then. Won't happen again.

Delisting approved? Does it mean all shareholders agreed on Rs 87.5 per share delisting option or just for delisting without considering the price offered? They will wait for the new price (reverse book building price)?
By when Vedanta will announce the price. Earlier they said 87.5 per share. What price they will consider for delisting?

Ideally it should be 140-150 per share.
 
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