April 26, 2011

Delisting Candidates - Message From Satyakam Mishra



Yogesh Radke, Senior Manager (Institutional Equities - Quantitative Research Desk) at Edelweiss Capital, in an interview with CNBC-TV18’s Udayan and Mitali Mukherjee, gave his strategy on investing in various scenarios.
Below is the verbatim transcript of the interview. Also watch the accompanying video.
Q: Where do you see AP Paper stabilising after a string of circuits? How would you advice investors to approach it?
A: The offer has been given at a much higher price. The stock would be at circuit levels till it reaches around 10-15% below the offer price. The valuations are very expensive at the offer price. I would recommend people to exit the stock at around 10-20% below the offer price, where the stock would stabilise till the open offer.

Q: It has been hitting multiple circuits ever since the deal was announced. What kind of acceptance ratio do you see happening on this particular issue?
A: That is something which has to be seen.

Q: What about Cairn? The market has its eye on that. The open offer should likely happen next week. How would you approach that?
A: The offer price is below the current market price. It is a crude play which is happening into the Cairn. The regulatory approvals would take sometime. The offer is expected to come in next few days. We have seen the current market price to cross the offer price. There is no play left in the open offer at present.

Q: Atlas Copco has accepted Rs 2750 as the exit price. What is the right way for the investors to be approaching this one at the exit price?
A: The shares have now accepted at the Rs 2750 price. So now the left grade is only to buy from the market and tender into the window period, which will be starting. The delisting will happen in the attractive levels. The marginal gain will be about 2-3% extra and be captured by doing an off- market tendering of shares to the company.

Q: We have the Patni open offer coming in as well. It is not a huge amount of arbitrage but what would you advice investors in this one?
A: The acceptance level is highly dependent on the ADS shareholders and considering that spread left between the share market price and the offer price, the ADS shareholder may not be tendering into the offer. So, the acceptance would be around the say 65% odd or may be much higher also.
It is recommended that even the stock can be held after the open offer also. We believe that the stock will not sharply correct after the open offer. So even for long-term investment, the stock looks good and even for the offer purpose that can be bought and tendered into the open offer.

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