Escorts announces open offer schedule; shares zoom 3%, hit new high

The stock hit a new high of Rs 1,874, and has appreciated 15% in the past six trading days

Volumes, price hike aid Escorts's Q3 performance

Shares of Escorts hit a new high of Rs 1,874, up 3 per cent on the BSE in Friday's intra-day trade, in an otherwise weak market after the company announced open offer schedule for stake purchase by Kubota.

Morgan Stanley India Company Private Limited, the manager to the open offer in public announcement said that commencement of the tendering shares period will open on January 11, 2022 and will close on January 24, 2022. CLICK HERE FOR DETAILS

Last week, on November 18, 2021, Escorts' board had announced that Kubota will acquire 46.9 million additional shares through preferential allotment plus open offer at a price of Rs 2,000 per share, and will join the Nandas as a co-promoter.

The Japanese agri machinery and construction equipment major, which owns 9.09 per cent stake, is expected to increase its holding to 53.5 per cent after a preferential issue of equity, open offer and equity reduction of Escorts Benefit and Welfare Trust (Escorts Trust).

In the past six trading days, the stock of Escorts has appreciated by 15 per cent from level of Rs 1,630 recorded on November 17. In comparison, the S&P BSE Sensex was down 4 per cent during the same period.

"As per the shareholding pattern, the minimum acceptance ratio is 51 per cent and the final acceptance could be around 70-75 per cent. Thus, with favourable risk to reward, one can look to participate at current market price," according to Edelweiss Securities. Ace investor Rakesh Jhunjhunwala holds 4.75 per cent stake in Escorts.

Kubota's takeover will substantially improve Escorts' medium-term growth outlook, based on localization of existing tractor imports currently done by Kubota’s India JV; leveraging Escorts for global component supplies to support Kubota’s global sales; technology support in construction equipment, farm implements and high-end tractors.

"There could be upside to the fair value from the usage of large cash reserves for buybacks or dividends. Taking robust growth prospects into account, we do not recommend significant tendering of shares in the open offer," analysts at Emkay Global Financial Services said in company update.