Action-packed weeks ahead for MNCs stock: analysts

Shares of multi-national companies (MNCs) will be in focus in the next few weeks as many of them will be required to either reduce promoter shareholding to a regulatory cap of 75 per cent or get delisted.

At least four companies -- Fresenius Kabi Oncology, Disa India, Blue Dart and Xchanging Solutions -- have already sold promoter shares through one-day Offer for Sale (OFS) window in recent weeks, while a few others like Honeywell Auto too are lining up their share sales in due course.

Under the offer-for-sale route, promoters can offload shares to any investor through a special window the exchanges allow for a day.

Market analysts believes that more MNCs may opt for the OFS route to comply with Sebi's norm as delisting is not a feasible option because of huge cost involved in it.

"These MNCs firms have only two option to comply with Sebi's directive either to reduce promoter's holding or get delisted. I think delisting is not viable option because of huge cost burden as many stocks have run-up in anticipation of delisting offers a huge premiums," Destimoney Securities MD and CEO Sudip Bandhopadhyay said.

"Sebi's deadline is approaching and in that scenario OFS mechanism is quite quick to reduce promoter holding. I am expecting that in the next two months, many companies will go for OFS route to shore-up non-promoter holding," he said.

He further said in the due course some correction in these share prices would be noticed.

"The shares would not crash because these are fundamentally sound companies but definitely the prices would go down," he added.

The proposed OFS by these companies has dashed the hopes of investors who had tanked up shares of MNCs in expectations of delisting offers at considerable premiums after expiry of market regulator Sebi's June 2013 deadline for maximum 75 per cent promoter holding in listed private sector companies.

Barring two, Thomas Cook and Singer, shares of the Indian subsidiaries of foreign multinational firms have fallen in the range of 1-18 per cent in the last two months compared to the BSE index, Sensex, which has dipped by a little over one per cent during the period.

Individually, Astrazeneca Pharma dived by (18.43 per cent), followed by Fairfield Atlas (17.75 per cent), Sharp India (13.3 per cent), 3M India (8.75 per cent) and Oracle Financial Services (six per cent).

Novartis, Gillette, BOC India, Elantas Beck India and Timken India too dropped on the bourses.

Earlier this year, share prices of many MNCs have spurted up sharply in anticipation that many of their promoters may delist them.

The foreign parents of three companies -- Fresenius Kabi Oncology Ltd, Xchanging Solutions Ltd and Disa India Ltd -- have diluted their holding in the last two months to the required 75 per cent using the offer for sale route.

Last week, Global logistics services provider DHL Express (Singapore) sold around six per cent stake in India's Blue Dart Express.