MNCs surge on delisting expectations

Shares of Indian units of many MNCs on Monday surged higher on expectations that these companies might be delisted from the Indian stock market as regulator Sebi has refused to extend its deadline for meeting a minimum public shareholding of 25 percent in these companies.

The Indian units of various multi-national companies (MNCs) have public shareholding of less than 25 percent and many of them have been resisting to dilute the promoter holdings to below 75 percent, for which Sebi has set a deadline of June 2013.

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While there have been demands for extending the deadline, Sebi Chairman U K Sinha on Saturday ruled out any extension and said it was a wrong perception that the time given to the companies was short.

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The companies which are unable to increase their public shareholding to a minimum of 25 per cent within the stipulated time would have to initiate a delisting process.

Reacting to Sebi’s fresh assertion about sticking to its timeline, share prices rose sharply today for the companies where public holding is less than 25 per cent.

Market experts believe that shares rallied for the Indian units of MNCs on expectations that their parent organisations may opt for delisting them, rather than diluting the promoter holding in the sluggish environment prevailing currently.

At the BSE, shares of BOC India were trading with a gain of 7.86 percent, Singer India (6.44 per cent), Sharp India (5.95 per cent), Honeywell Automation India (5.54 percent), Fresenius Kabi Oncology (5.43 per cent), Astrazeneca Pharma India (4.87 percent) and Oracle Financial Services Software (4 percent).

In addition, Elantas Beck India, Wendt India, Kennametal India, Fairfield Atlas and Timken India have surged more than three per cent on the BSE.

The gains were much higher than about one per cent upsurge on the barometer index, the BSE Sensex.

“With Sebi mandating that all listed companies have to increase public shareholding to a minimum 25 per cent by June 2013, these companies have to take a call sooner or later whether to reduce promoter holding or go for delisting mechanism,” Destimoney Securities MD and CEO Sudip Bandyopadhyay said.

PTI