Delisting offers galore: Which one should you tender?

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Delisting offers galore: Which one should you tender?

Several delisting offers are open in the market right now — the likes of BOC India, Nirma, and Atlas Copco to name a few. In an interview with CNBC-TV18, Jagannadham Thununguntla of SMC Global and Aashish Tater of Fort Share Broking advice which one should investor opt for and which one should be avoided.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets Nifty BSE | NSE 30/05/12 Are Mutual Funds betting on Nifty? Other Stocks in this news BOC India | Atlas Copco (India) | Kennametal India | Binani Cement | Binani Industries |

Several delisting offers are open in the market right now - the likes of BOC India , Nirma , Kennametal India and Atlas Copco to name a few. In an interview with CNBC-TV18, Jagannadham Thununguntla of SMC Global and Aashish Tater of Fort Share Broking advice which one should investor opt for and which one should be avoided. 

Below is a verbatim transcript of the interview. Also watch the video.

Q: Let us start with BOC India where the floor price is set at Rs 225 a share. The current market price is closer to Rs 340 a share. What do you think this will find it tough to go through?

Tater: Last time we discussed this particular stock, it was hovering around at Rs 280-mark and I suggested that Rs 270 is a level where I feel there is fundamental value left into the stock. I suggested that at Rs 350 to Rs 400 is a maximum that the promoters would be willing to pay for this particular stock. Looking at the scattered shareholding, I think BOC India would actually see a failure in terms of delisting process. Again I would wait and recommend all the investors to wait till that Rs 270-280 level comes by. I feel that BOC will again come up with an open offer at a higher price that is revised close to Rs 350 to Rs 400.

Now here is a catch: Linde Group actually acquired BOC parent company at an annualised capital earnings of close to 14.5%. If I see the financials of this company for the next four-five years, if adjust that same annualised capital earnings on to the stock, the stock somewhere should be ruling at around Rs 350-360-mark, which I feel is fully priced for the stock. There is definitely chance that the delisting process will fall through and the stock could again come down to the RS 270-280 comfortable levels where we can re-enter the stock.

Q: You got a different view on this one. You think actually the delisting might go through?

Thununguntla: Yes. It wouldn't be that easy but it is possible because the large shareholders do have some shareholding and in case of retailers what is happening is about 41 lakh shares they have and 10 lakh shares response has to come from the retailers. As you would appreciate as discussed last time it all boils down to retailers and how their response is going to be for the reverse book building. Ultimately, for a delisting to go through, one has to reach 90%, that is, promoter has to reach 90% or 50% of the delisting offer whichever is higher has to meet. So in that context retailer holds the key. So if the 10 lakh out of 41 lakh shares retailers come it may be possible-it won't be easy but it is possible.

But whatever said and done share price has rallied way ahead in terms of and in the anticipation of the delisting I do not think any fresh buying is warranted at this level. If somebody is having, nothing wrong even in booking profits. Any disturbance at the time of delisting the share price can correct very fast.