Analysts will watch out for future course of action from the investor group and promoters as marquee investor, Radha Kishan Damani has increased the equity stake in N. Srinivasan’s India Cements to just under 20 per cent.
India Cements (ICEM) has submitted its latest shareholding pattern for quarter ending March 2020 to the stock exchanges. Accordingly, prominent investor R.K. Damani with his family members have raised stake in India Cements from 4.73 per cent at the end of 3QFY20 to around 20 per cent by end-4QFY20. The stake increase has been through purchase of shares from open market.
Centrum Broking, in a research note, said that three possible scenarios can play out with the first one being that the investment by the investor continues to increase and reaches the threshold 25 per cent which will trigger an open offer.
In the second scenario, India Cements promoter hikes the stake from current 28 per cent to mid-30 per cent including other strategic investment to take the stake to the dominant holding levels surpassing 50 per cent,
According to Centrum Broking, the third scenario includes other strategic action by the promoters.
In all these scenarios, the stakes will be increased by either turbulence in the market or pre-set valuations at higher levels.
“These actions will keep the valuations higher except if the current investor remains to be a value investor as indicated by the management during our interaction,” Centrum Broking said.
“We will follow the investor/promoter action diligently and update accordingly. However, it will be a complete disconnect with the fundamentals of the company as the valuation movement is triggered by investor/promoter action and not by any strategic operational or financial change,” it added.
