Vedanta delisting opportunistic, price way below intrinsic value of stock: Report

The decision of Vedanta's promoters to take the firm private by buying out shareholders at Rs 87.50 a share is "opportunistic and the price does not reflect the fundamental value of the equity", Institutional Investor Advisory Services said on Friday.

The promoters will have to offer a significantly higher exit price if the bid is to succeed, it added.

Last week, billionaire Anil Aggarwal-run Vedanta Resources, the London-based holding company, saidit will buy back Vedanta shareholders at Rs 87.50 a share and take the company private.

The offer price was at 9 per cent premium over the previous day's closing price, but since then the stock has rallied and closed at Rs 92.90 on the BSE on Friday.

"The free float market capitalization of Vedanta is around USD 2.2 billion and we expect the parent to shell out significantly more, if the delisting is to go through," the shareholders advisory said in a note.

Attributing the move to go private to promoters' debt repayment pressures, the advisory said, "Vedanta delisting at a floor price of Rs 87.50 is opportunistic. The stock is currently trading close to its 52-week low, which is a steep discount to its historic five-year average as a natural fallout of the current economic environment and the COVID-19 crisis."
The board is meeting on May 18 and it must articulate "whether retail shareholders must vote for delisting and also indicate a price range that reflects the intrinsic value of the stock."