Sebi asks ICICI Securities to amend research note on Vedanta, plans probe

brokerage published a report downgrading the stock from 'hold' to 'reduce' citing reduced book value approved by Sebi

ICICI Securities has landed in a tight spot over a research note on delisting-bound Vedanta. On October 5, the brokerage published a report downgrading the stock from ‘hold’ to ‘reduce’, citing reduced book value approved by the Securities and Exchange Board of India (Sebi).
 
The markets regulator took objection to the statement, directing the brokerage to issue a clarification and make an amendment to the report.
 
“As directed by Sebi, we are hereby issuing the following clarification on the misstatement given by us in the equity research report on Vedanta dated October 5, 2020... in this report it was inadvertently mentioned that Vedanta has highlighted the Sebi-approved book value (excluding the revaluation reserves) of Rs 89.3 per share. The same should be read as Vedanta has highlighted that the FY20 book value is Rs 89.3 per share.
 
Sebi neither approves nor disapproves any listing price, de-listing price or book value,” ICICI Securities said in a public notice advertisement.

 
Sources said Sebi plans to launch a probe over the timing of the report and wrong attribution. “The report was released on the same day as the start of the reverse book building (RBB). The matter needs to be probed to check if the error was indeed inadvertent or there was any intention to influence the delisting process,” said a source close to the development.
 
ICICI Securities refused to offer any further comments on the issue. An email sent to Sebi didn’t elicit any response immediately.
 
J N Gupta, co-founder, Stakeholders Empowerment Services (SES), said research notes issued by brokerages should be consistent and follow the rules and regulations.
 
Anil Agarwal-led Vedanta Resources launched the RBB to delist Vedanta on October 5. RBB is a process to determine the exit price for delisting. Shareholders are free to place their bids at any price above the floor price. Vedanta has set the floor price for delisting at Rs 87.3 per share. In September, the commodity major slashed its book value from Rs 146.87 to Rs 89.3, citing a write-off of over Rs 20,000 crore from the capital reserves.
 
Some believe Sebi should launch a holistic probe as to whether the company has deployed tricks to lower expectations of shareholders from the delisting bid.

Vedanta RBB garners 300 mn bids

The bid to take Vedanta private will have to do all the heavy lifting on Friday, the last day of the reverse book building (RBB) process. Until Thursday, the RBB had garnered bids of nearly 738 million shares — about 55 per cent of the minimum 1.34 billion bids required to delist. 

The RBB has got about 677 million bids at less than Rs 175 per share. However, nearly 40.8 million shares got tendered at Rs 320 per share, the data provided by the BSE showed. The names of the investors couldn’t be ascertained. Many speculated that the bid could be from LIC. 

“It remains to be seen at what price large investors place their bid on Friday. If the price is too high, there is fear that the delisting bid may not go through,” said an analyst. Shares of Vedanta ended at Rs 117.6 — down 5 per cent on Thursday. A day earlier, the stock had corrected 11 per cent.  Samie Modak