Macro Moves

Vedanta's Delisting announcement from Indian Stock Exchange

Created on 19 May 2020

Wraps up in 2 Min

Read by 2.3k people

Updated on 01 Sep 2022

There are some people you see in life who are simply unpredictable. They usually behave in a way “Now you see me, now you don’t”. The consideration comes when such kinds of people head businesses and other people invest in them. Here we are talking about Vedanta Group and its owner Mr. Anil Agarwal. You would surely be aware of Vedanta’s delisting.

It was all of a sudden when Mr. Agarwal announced that he wishes to take the company private in India through voluntary delisting. But, it is more important to understand as to why did he decide this? And, what’s the benefit that he might be looking for? Also, it’s important to understand where do the minority stakeholders (or shareholders) stand in this (if it comes through). Because, the delisting offer made by the firm stands at Rs. 87.5 per share.

What Does This Mean?

The delisting offer has gathered criticism from the analysts because of the share’s much higher book value. It is important to note that the current share price levels are almost half of the 52-week high achieved six months earlier (Rs. 150 levels). So, by delisting now, the company would be able to clear off its debt in the medium term. And, since mining is a capital intensive business, the firm is expected to enjoy greater operational and financial flexibility.

But, is this all going to be that simple? Probably not. Usually the delisting process is lengthy and might even take years to complete. Also, gathering the consent of all the stakeholders involved is crucial. Overall, with the current price levels and company’s delisting price offer, this looks like the prime time to go for it (from the company’s perspective) as the owners are set to gain a lot from it. Just that they shouldn’t forget the minority shareholders at this point and think about their welfare too.

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Deb P Samaddar

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If people could be named after idioms, Deb would be called "I'm all ears." His brain is a storehouse, ever overflowing with derelict information. So, while most things he talks about are as useless as occasion-less greeting cards, everything he writes has the potential of bagging you multiple diplomas!

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