Vedanta Resources Plc launched an open offer to acquire a 10% stake in its India unit, a couple of months after a failed delisting.
The parent has offered to buy up to 37.17 crore shares from public shareholders of Vedanta Ltd. at Rs 160 apiece, according to an exchange filing. That's a 12% discount to Friday's closing price.
Shares of Vedanta dropped as much as 3.7% to Rs 175.35 apiece in early trade on Monday compared with a 0.81% gain in the Nifty 50.
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Here's what brokerages have to say…
Investec Securities
Maintains ‘buy' with a target price of Rs 147 apiece
Vedanta Resources makes good on SEBI's temporary regulations on takeover code
Assuming successful tendering, the promoter's stake will increase to 65.11%
After failed reverse book building, accelerated share purchase and voluntary open offer were logical conclusions
Move to reduce leakage while upstreaming dividends
Recommends to tender based on target price
Multiple potential uncertain events remain such as Bharat Petroleum Corp. acquisition, Videocon Industries Ltd. bid, lease expiries, production sharing contract extensions, among others
Edelweiss Securities
Downgrades Vedanta to ‘hold' from ‘buy', with target price at Rs 170 apiece
The stock has achieved fair value of Rs 170 and is just a dividend play
Open offer price remains pretty unattractive
Upside potential is limited despite positive view on commodity cycle
Stock volatility might not yield good returns for minority shareholders
Motilal Oswal
Maintains ‘neutral' with a target price of Rs 187 apiece
Sees Vedanta's open offer to buy about 10% stake as a step towards another attempt at delisting
An open offer at around 12% discount to current market price could adversely impact the stock price
If the open offer goes through, promoter shareholding would rise to nearly 65%
Capital allocation would be a key factor to watch
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