Street signs: Gail buyback, Medical device makers to gain, and more

Benefiting from Gail buyback

Gail (India) has announced a Rs 1,083-crore share repurchase programme. The state-owned firm will buy back 57 million shares at Rs 190 apiece, a 17 per cent premium to Gail’s last closing price of Rs 162. Brokerages are advising their retail clients to buy shares of Gail to take advantage of the arbitrage opportunity. According to one estimate, the acceptance ratio for retail investors in the buyback is expected to be around 15-20 per cent. In other words, between 15 and 20 shares can get accepted for every 100 shares tendered by small shareholders. In the run-up to the ex-date — which will be announced by the company in due time — investors should monitor secondary market price and the latest shareholding pattern, said an analyst.

Medical device makers to gain

Shares of medical device manufacturers are likely to gain on account of an increase in demand for health care services. According to analysts, the sector is fragmented and dominated by multinationals (MNCs). However, domestic players are beginning to capture market share by providing high-quality products at affordable rates. The domestic medical device industry is expected to grow at 12-13 per cent compound annual growth rate over FY20-25, according to a report by ICICI Securities. Also, the government push in the form of the Make in India initiative and health-cess on imports is helping domestic manufacturers. Analysts say companies such as Poly Medicure and Tarsons Products could gain in the long term.

Passive inflows in Max Healthcare 

Max Healthcare Institute is likely to see buying from passive funds tracking global indices. FTSE Russell has announced that the stock's weightage will go up in four of its indices, effective April 6. This follows private equity major KKR’s divestment of 10 per cent stake in the company. On Thursday, Kayak Investment, a KKR affiliate firm, sold 97 million shares for nearly Rs 3,000 crore through block deals. According to an estimate by Edelweiss, the stock of Max Healthcare could see inflows of over Rs 100 crore.