AB Nuvo may see pain; win-win situation for Grasim: Experts

Boards of AB Nuvo and Grasim have decided to merge the two companies and then demerge Nuvo’s financial business to form a separate entity before listing it. For every 100 shares of Nuvo, shareholders will get 30 shares of Grasim. Investors were expecting a much better swap ratio for Grasim, says market expert Rakesh Arora. Grasim could fall further to levels of Rs 4,000 in the near to medium term.“They will create shareholder value but it will be less than value in subsidiaries,” he says.AB Nuvo too will feel the pain in the near-term. There is no possibility of sweetening the deal, but it may not go through if shareholders don’t approve, Arora says. However, Sanjiv Bhasin of IIFL believes that Grasim at Rs 4300 and below is a good buying opportunity with a long holding period. “In long period, it is a win-win situation for Grasim,” he says.  Arora recommends staying away from both the stocks till better clarity emerges. AB Nuvo will see some fall in near-term, but this will cushioned by the growth that the stock has seen in last two months. AB Nuvo may see more pain, but Grasim is where the money lies, says Bhasin. Watch video for more..