Samvardhana Motherson tanks 9% after 5% equity change hands via block deals

Shares of Samvardhana Motherson International tumbled 9 per cent to Rs 69.55 on the National Stock Exchange (NSE) in Thursday’s intra-day trade after nearly 5 per cent equity of the auto components & equipments company changed hands.

Till 09:18 AM; around 305.61 million equity shares representing 4.5 per cent of total equity of Samvardhana Motherson had changed hands on the NSE. Meanwhile, on the BSE, around 14.73 million shares or 0.22 per cent of total equity of the company changed hands, the exchange data shows. The names of the buyers and sellers were not ascertained immediately.

As per media sources, Sumitomo Wiring Systems Ltd (SWS) was to sell 230 million shares in the company i.e. around 3.4 per cent stake via block deal mechanism on stock exchanges today. The floor price for the deal was to be around Rs 69.90 per share (i.e. a discount of 9 per cent to last closing price) with total transaction value pegged at Rs 1,600 crore, the report suggested.

SWS, the promoter company held about 17.55 per cent stake in Samvardhana Motherson as of December quarter, the shareholding pattern data shows.

Post this transaction SWS’s stake in the company will stand reduced to around 14.15 per cent vs. 17.55 per cent. Given the floor price is at a discount to last closing price of Rs 76.8/share, the brokerage firm expected stock to open negative in opening trade today.

Moreover with intention to sell and still substantial stake balance with SWS, the stock might not perform in the near to medium term despite healthy financials and calibrated acquisitions announced by the company in the recent, ICICI Securities said in a note.