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Last Updated : Sep 17, 2019 12:35 PM IST | Source: Moneycontrol.com

Tata Communications' stock plummets 39% to Rs 260 post demerger of its land bank

As per the demerger scheme, around 773.13 acres of surplus land has been transferred to Hemisphere Properties India

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Shares of Tata Communications fell as much as 39 percent to Rs 260 intraday on September 17 after its land bank was demerged into a separate company.

The company, on August 8, said the Ministry of Corporate Affairs (MCA) has approved Hemisphere Properties India (HPIL) demerger scheme on August 5 and it has filed the order with the Registrar of Companies on September 17.

Consequently, the Scheme has given effect to the demerger of about 773.13 acres of surplus land to HPIL.

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As per the demerger scheme, Panatone Finvest, which is a special purpose vehicle under the Tata group of companies, would transfer its shares in HPIL.

This means the government and Videsh Sanchar Nigam (VSNL) shareholders who had surrendered their shares in Panatone's open offer in 2002 will receive shares to the extent of 25 percent and 20 percent, respectively.

About 3.87 percent will be retained by Panatone Finvest, which the company acquired from the open market, the statement added.

The Mumbai Bench of National Company Law Tribunal (NCLT) had approved the Scheme on July 12, 2018. HPIL, being a 'government company', had filed its petition seeking sanction to the Scheme, before the Central government through the Ministry of Corporate Affairs (MCA).

On March 5, 2018, the company filed with NCLT its scheme of arrangement and reconstruction among the company and HPIL and their respective shareholders and creditors for demerger of surplus land. By order of the NCLT, a shareholders' meeting was held on May 10, 2018, at which the shareholders approved the Scheme.

While maintaining hold call on the stock, ICICI direct removed the land value of Rs 263 per share from its target price and valued the residual company (TCL) at an SOTP target price of Rs 260/share.

"We value GDS business at 5x FY21 EV/EBITDA while the voice business is valued at 3x FY21 EV/EBITDA," it said.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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First Published on Sep 17, 2019 11:04 am
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