Vedanta - To Tender or not in Open Offer?

By Research Desk
about 3 years ago

Vedanta promoter open offer of 65.10 crore shares, of Vedanta Ltd, being 17.51% of total issued equity, at Rs. 235 per share, now open, is closing on Wednesday, 7th April, 2021, for which, payment will be received on Monday 26th April, by the tendering shareholders.

Now the dilema before all the shareholders are to tender or not, in open offer. We need to have some pre-requisite assumptions to take a call on the stock -

1)    100% acceptance in open offer may be expected,

2)    In such an event, promoter stake will rise to 72.62% from 55.11% now, which is seen postive for the stock, as sahre price may rise from here in calendar year 2021,

3)    Q4FY21 and FY22 results are seen to be good of Vedanta, as all its 5-6 verticlas are seen doing extremely well,

4)    This is the calculated move of the Promoter of Vedanta, to pursue its inorganic growth, by various acquisitions.

All 4 possibilities are only giving positive view on the stock from hereon, for this calendar year.

1) If one is prepared to take moderate risk, it may be prudent to hold the shares, by sacrificing Rs.5 now existing between open offer and current market price of Rs.230.

2) Those holding shares in quantity of 6,200 shares and in multiple thereof, can tender in open offer and buy 6,200 shares or in multiple thereof in Futures. This Future trade can be converted in delivery on Monday, 26th April, on open offer payment to be received, as April series expiry is on Thursday 29th April.

3) Options trades of CE selling, or PE selling or CE buying is not advised, as stock may show intra series volatility, while many members have no capacity and temperament to face such volatility. However, those holding 6,200 shares or in multiple thereof, and opting not to tender in open offer, may write April 235 CE at Rs. 6. But they must remain prepared to release delivery on expiry, if share price moves to Rs. 241, while there effetive realisation will be higher by Rs.6.

4) Those who are not holding it now, can buy from open market, tender in open offer, to earn cool 2%, being arbitrage gains, in 3 weeks.

We will not be surprised to see share rising close to Rs. 285 by December 2021.

This is neither a buy nor a sell recommendation, while stock recommendations are provided exclusively to our paid members in the Member Zone.

When we gave buy call at Rs. 95 on 9th Nov, 2020, many members here were scared or not finding it safe to buy, as Media and Big Fish were scaring by giving all negatives then on the Company and its Promoters.

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