On Monday, Hexaware shares traded at ₹329.90, up 6% from previous close. They had hit 20% upper circuit on Friday when the company had announced its intention to delist the stock
MUMBAI: Hexaware Technologies' actual offer price to delist its shares could be at a 30-40% premium to the closing price prior to the announcement, according to analysts.
According to Morgan Stanley, if successful, the exit price could be at 35-40% premium to pre-announcement price, if not, stock could pare gains. While the floor price will be announced in due course, promoters have indicated an offer price of ₹285 per share - an almost a 10% premium over the closing price of 4 June.
On Monday, shares of Hexaware traded at ₹329.90, up 6% from previous close. Shares had hit 20% upper circuit on Friday when the company had announced its intention to delist the stock.
A board meeting is scheduled for 12 June to consider the delisting proposal. According to the company, delisting would not only provide operational flexibility and cost savings and re-channel management bandwidth towards business but would also give public shareholders the opportunity to realize value in an uncertain environment.
As of 31 March, promoters held 62.4% stake in Hexaware.
Morgan Stanley has said that for the delisting to go through, promoters should hold at least 90% stake.
Based on past delistings, including IT services stocks like Polaris and Patni, on an average, a successful delisting has been at a premium of 35-40% to the pre-announcement price. “If one were to extrapolate similar trends for Hexaware, the exit price could be in the range of ₹350-365 per share," said Morgan Stanley. It added that if the delisting attempt is unsuccessful, share price of Hexaware could potentially revert to pre-announcement levels.
Analysts at Emkay Global Financial Services see a strong likelihood of a higher offer price on account of much higher valuation multiples accorded to recent buyouts by strategic and financial investors, relative valuation discount for Hexaware at the offer price compared to peers and past precedents wherein offer prices have seen significant upward revisions.
“We see a strong likelihood of an upward revision in the offer price for Hexaware on account of recent deal benchmarks for strategic buyers and financial investors, valuations discount to tier II peers even after a 20% run-up in the stock on Friday and past precedents where we have seen significant upward revisions in the offer price after the initial offer," said Emkay Global Financial Services.
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