Promoters have exercised their warrants @ Rs. 72.75 for 12.53 Lac shares (Rs. 24.25 was already paid in the past). So effectively promoters have received shares at Rs. 97 whereas the CMP is approx. 280.
The down side of the warrant conversion is that the EPS will come down and that some people may feel that the promoters have received a fantastic deal. On the upside the debt to equity ratio will improve and promoter’s stake has increased by ~4%, which may give confidence to other investors, so long as these shares are not off loaded in the open market.
Overall, this move is neutral as of now. Important to see how the company uses this equity infusion – to retire old debt or to expand capacity.
Disc: Invested since more than 1 year and presently holding.
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