Vedanta Limited shares pared gains after surging 10% in early trade on Wednesday as the company said that its holding group is looking to delist the company from the BSE and NSE.
Vedanta informed the stock exchanges its promoter group has offered to buy out all the public shareholders in the company at an indicative price Rs 87.50 per share, at roughly 10% higher than the stock’s closing price of Rs 79.60 on Tuesday.
The company would have to pay Rs 16,200 crore to public shareholders at the offer price.
The stock rose 10% to Rs 98.20 apiece on the S&P BSE Sensex. At 9:43 am, the stock pared gains and was trading 2.7% higher at Rs 91.70.
And at 11.46am, Vedanta share was trading 0.22% lower at 89.10.
“The sharp correction in commodity prices due to an impact on demand from the COVID-19 pandemic does not bode well for the near-term earnings outlook,” brokerage firm Motilal Oswal said in a note.
“Focus on reducing the cost of production, particularly in the aluminum business through higher captive bauxite and coal linkages, should help partially cushion the adverse impact on margins from lower prices. High debt at VEDL’s parent entity continues to raise concern. Maintain Neutral with an SOTP-based TP of INR85/share,” it added,
{{/usCountry}}“Focus on reducing the cost of production, particularly in the aluminum business through higher captive bauxite and coal linkages, should help partially cushion the adverse impact on margins from lower prices. High debt at VEDL’s parent entity continues to raise concern. Maintain Neutral with an SOTP-based TP of INR85/share,” it added,
{{/usCountry}}The promoter group, including Vedanta Resources, owns 50.14% of Vedanta Ltd and the remaining 49.48% is held by the public.
“The company has received a letter dated May 12, 2020 from one of the members of the promoter and promoter group of the company, Vedanta Resources Ltd. In the letter, VRL has expressed its intention to, either individually or along with one or more subsidiaries, acquire all fully paid-up equity shares of the company held by the public shareholders and consequently voluntarily delist the equity shares from the BSE and NSE,” Vedanta said in its filing to the stock exchanges.
Vedanta share prices have fallen more than 40% this year, giving the company a market value of about $4.4 billion.
The company’s board will be meeting on May 18 to consider the delisting proposal.
It was delisted from the London Stock Exchange by its promoters in 2018.