We are at an interesting juncture. Please note, I’m also not an expert on this subject nor I claim to have superb understanding of these recent developments.Just wanted to share some things which is going in my head.
I agree and also didn’t like terms of raising a preferential allotment at a price with such deep discount to the market price. But the interesting thing is, would we be having this conversation just a week back? The stock gave 60-65% move in just a single week that means somebody has reacted to that move before the communication was released or may be at the news of fund raise or MoU news with Tamil Nadu Government. Before the price move last week, the same fund raise would have been appraised by me at least.
I don’t understand the good vs bad about this. So I was specifically looking for the price move today to gauge how the market feels about this. I was expecting a down circuit (-10%) but to my surprise 6% down move was I guess a profit booking exercise more than anything else. Still not sure how the coming days would fare or if there would be further deeper corrections but it feels like market’s collective wisdom is taking a breather just like everyone of us.
Infusion of capital in the most general sense is fundamentally good at least from business operation point of view and gives signs that business is looking for growth in the coming days. We can argue about the quality of growth or the forensics involved but Growth is by far the least doubtable reasons whenever any management talks about QIPs, Preferential Allotments, warrants and similar stuffs.
Lastly, as per the disclosures even all the promoters except Ashish Bansal (who can be allotted warrants) will face equity dilution like most of the retail investors…right? So would the promoters not participating in such Preferential Allotment agree to it? May be Yes…if there is some internal evil malice plan…or if there is a true need of capital to build something bigger…and No… if they think the discount is too steep and does look like a bad deal in terms of their own equity dilution.
What can we do – this is still at the proposed stage correct…? We can collectively vote against it… I understand it sounds funny and might not mean much. But thats one of the way to show the dissapoint ment and other being getting out of the train?
The reason why we are thinking about this is simple… Risk is synonymous to returns…and like a coin, it is only possible to face a single side at once, with just a brief idea about what’s on the other side looks. The question is…which one should we prioritise over the other?
Disc: fully invested (no trading in the last 30 days)
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