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News: In a regulatory filing, Minda Corporation Limited has informed exchanged that it had sold 1.9 crore equity shares of Pricol Limited (Pricol) representing 15.7% of Pricol. The share sale was executed through bulk-block deal mechanisms on stock exchanges. The transaction was executed at a price of ₹343.6/share (~7% discount to CMP). Post this transaction Minda Corp holding in Pricol is nil.
Views: This is a welcome step and clears the cloud of hostile takeover of Pricol by Minda Corp which could have potential led to some disagreements. Minda Corp had purchased stake in Pricol in February 2023 at a price of ₹ 209/share (aggregating to ~₹400 crore from open market) and hence realised healthy gains (~₹255 crore; sale proceeds pegged at ~₹ 656 crore) equivalent to its annual PAT numbers. It also puts to rest risks associated with leverage buyout of the target and that too at a potential superior pricing, positive for Minda Corp. Pricol on the other hand stands to benefit as it is now owned by (corresponding to this 15.7% stake buy) marquee institutional investors like Goldman Sachs India MF, ICICI Prudential MF, Tata MF, Fidelity MF and EPF among others. We have a positive view on both the company’s primary led by value addition play however prefer Pricol amidst its ambitious growth targets and reasonable forward valuations. We expect both stocks to open positive in opening trade today.
Impact: Positive