Vedanta Update: Stock soars as promoters increase stake!

Vedanta Update: Stock soars as promoters increase stake!

Last updated: 24 Dec, 2020 | 07:55 am

Vedanta Update: Stock soars as promoters increase stake!

Promoters buy additional 5% stake

  • On 24 December, there were reports that Vedanta Ltd parent company Vedanta Resources, will buy up to 5% of the company’s total stake on Thursday through block deals.
  • The Promoters fixed the price range between 150 and 160 per share for the offer. This will increase the promoters’ stake from 50.14% to 55.04%.
  • As per trade data from exchanges over 200 million, or 6% of the total equity of the company, changed hands via block deals in early morning trades on the BSE and NSE. 

Outlook going forward

  • In October this year, the promoters had tried to delist the company at a floor price of 84. However, the offer failed to garner interest as many analysts and institutions had said that the shares are undervalued at the set price and are much below the book value of the company. 
  • After this failed attempt, the promoters have turned to the open markets to increase their stake. This act of purchasing company shares by its promoters over a number of small transactions, so as to increase their stake in the company by an economically significant amount is known as creeping acquisition. 
  • As per SEBI norms, promoters are allowed to acquire up to 5% stake in their company in a financial year through creeping acquisition.
  • Further increasing the stake in the future may make the delisting task easier for the promoters.