It has been reported over the weekend that RBI has relaxed norms for foreign investors, including NRIs, to invest in Indian companies. This has resulted in a lot of buzzing stocks, but the prime benefit will go to foreign promoters with less than 75 percent stake in an listed entities.
According to Sebi norms, listed private firms ought to have a minimum 25 percent public shareholding, which means promoters can own up to 75 percent. Beyond 90 percent ownership warrants delisting. So if shareholding is below 75 percent - anywhere between 60-75 percent - then there is legroom for promoters to utilise the eased FII norms and then look for delisting if at all, going ahead.
So, looking at companies where FII ownership is between 60-75 percent, the first company which tops the list would be GSK Consumer Healthcare where FII holding is nearly 72.5 percent. They recently increased stake during the open offer at a price of nearly Rs 3,800 per share.
Castrol India is the other counter where FII ownership is nearly 71 percent, Pfizer 70 percent and Alstom India, which is buzzing today is up nearly 6 percent, FII ownership is at around 68.5 percent. Ranbaxy will be very interesting to watch where Daiichi owns 63.50 percent. So there is legroom. Nestle India is another 62.50 percent.
So you could see many companies, but important is to note that there are companies where there is no legroom so that means the FII ownership stands at 75 percent, if they want to up it higher only for delisting, they have to hike stake to 90 percent which is a huge 15 percent.
Companies like ABB, which is up nearly 20-21 percent, FII ownership stands at 75 percent. Others with 75 percent stake include Siemens India , Abbott India, Oracle and Thomas Cook. So there is no legroom for promoters to come and buy any additional stake; they have to just delist the company if they wish to.