NEW DELHI: Aditya Birla group stocks Grasim IndustriesBSE -1.42 % and Aditya Birla Nuvo (AB Nuvo) slumped over 23 % in Friday’s trade after the panel of the two companies agreed to a $11 billion merger plan, which did not go down well with investors.
The commission said the financial services business would be carved out into a new entity. Shares of AB Nuvo nosedived 18.08 % to punch a bottom of Rs 1,196.70 on Friday morning, while Grasim slumped 5.77 per cent to Rs 4,277.
The companies assumes the merger would give investors a diversified portfolio of cement, financial Services and telecom businesses, creating a affect on India’s utilization story. However, analysts estimated the deal to be unfavourable for miniority shareholders.
“Our determination stock exploit analysis suggests the holding company’s discount may have to narrow to less than 35 per cent for investors to build money, if the deal gets all approvals, including that from minority shareholders. A 10 % maxim discount lowers the 12-month target pride by Rs 610 a share,” Edelweiss Securities said in a notation.
“Bearing in judgement that the danger in the cement sector are receding slowly, we would rather own pure plays like Shree CementBSE 2.87 % and UltraTech Cement,” the brokerage said.