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De-listing hopes boost MNC stocks

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Shares of Indian units of multinational companies (MNCs) surged on Monday on expectations that their foreign parents would opt to de-list them after the government made it mandatory for all listed companies to have minimum 25 per cent public holding.

Stocks such as Fairfield Atlas, Ineos Abs, Astrazeneca Pharma, BOC India, Gillette India, Oracle Financial Services, Alfa Laval, and rose by 6-15 per cent in a weak Mumbai market. The Bombay Stock Exchange benchmark declined about 2 per cent to close at 16,781.07 on Monday tracking weak global markets.

From the shareholding data on March 31, foreign promoters of all these companies have more than 75 per cent stake. Analysts said some of these companies would get de-listed from the stock exchanges after the new government norms, as their foreign promoters would not like to dilute their stake.

“We would not be surprised to see some of the MNCs take the companies private and de-list,” said Bharat Iyer, JP Morgan’s head of equity research in India, in a note to clients.

The government on Friday made it compulsory for listed companies to have a minimum public holding of 25 per cent. According to JP Morgan, MNCs will have to raise $600 million to comply with the new norms.

HOT CAKES
(Price in Rs on ) June 7 % Chg* Promoter
Stake (%)#
India 338.10 14.22 83.33
Fairfield Atlas 53.90 11.59 83.91
AstraZeneca Pharma 905.65 9.68 90.00
BOC India 228.05 9.56 89.48
Gillette India 1639.80 7.18 88.73
Oracle Financial 2212.50 6.63 80.47
Alfa Laval 1354.20 6.22 88.77
Fresenius Kabi Oncology 135.44 6.10 90.00
Novartis 635.04 5.35 76.42
* Over Prev Close
# as per share holding pattern - March 10

“Most MNCs in pharmaceutical and FMCG (fast moving consumer goods) space would opt for de-listing,” said Ajay Parmar, head of institutional research at Emkay Global Financial Services. According to him, investors in these companies should wait for a better price.

Indian units of several MNCs, like Reckitt Benckiser India, Philips Electronics India and Cadbury India, have posted impressive numbers after from stock exchanges and doled out hefty dividends to their investors. Some of the MNCs, who want to take 100 per cent control of their Indian units, have come out with several buyback offers. In the past, investors who have sold their shares in the first buyback have missed out on a much higher price in the subsequent offers.

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