Shreyas Shipping to delist from exchanges. Will retail investors get a fair exit?
Shreyas Shipping and Logistics promoters have suggested delisting the company from exchanges to obtain full control over operations, reducing compliance costs and providing more time for business operations. Under this proposal, Shreyas Shipping’s shares would be purchased from public shareholders through reverse book building. This move could enable an exit opportunity for shareholders at a premium from current market prices. The board meeting for this proposal is scheduled for May 24th. The company’s undervaluation could allow promoting group Transworld Group to obtain the shares at a discount.
The promoters of Shreyas Shipping and Logistics have proposed to delist the company from the exchanges by buying out the entire share lot from public shareholders.
Shreyas Shipping is a leading player in the coastal shipping sector and is engaged in owning and operating container feeders. The company with a market capitalisation of Rs 686 crore falls into the microcap category.
The floor price will be determined through the reverse book building mechanism stated in the delisting regulations. The board meeting for the same is expected on May 24.
“The current delisting provides an excellent opportunity for existing members and shareholders to exit at a significant premium from the current market price,” said Siddharth Oberoi, Founder and CIO, Prudent Equity.
Promoter Transworld Group said the delisting of Shreyas Shipping would enable the members of the group to obtain full ownership of the company, which in turn will provide enhanced operational flexibility.
As the company will no longer remain listed in India, there will also be reduction in dedicated management time to comply with the requirements associated with continued listing of equity shares, which can be refocused on its business.
The proposed delisting of the company, the promoter believes, will result in reduction of the ongoing substantial compliance costs, which includes the costs associated with listing of equity shares.
“This is a big positive and shows the commitment of the promoters to business so much that they are willing to buy the whole company. The company is currently trading at dirt cheap valuations and hence one can understand the promoters interest to buy the whole company,” Oberoi said.
Although the entire delisting to go through is completely dependent on the promoters to accept the bid price which will be discovered through the reverse book building process, as the company is highly undervalued at the current market price, analysts believe the promoters would be getting a steal even if they are able to buy-out the company at Rs 400 per share as well.
NovaaOne Capital is acting as the manager to the offer to Transworld Group on the delisting process, while JSA Advocates & Solicitors are acting as legal advisors.
On Friday, Shreyas Shipping shares were locked in the 20% upper circuit at Rs 312 on the NSE. So far this year, the stock has gained by a marginal 4%.
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