Still An Opportunity - Grasim Industries Ltd, BSE Code - 500300
Grasim Industries Ltd has become active once again in the markets. Attracting traders and investors alike. The main reason is the would be listed ABCL. Its listed price will have a bearing on this counter.
Grasim Industries Ltd is holding 56% stake in the 2200.09 crore paid up equity capital of ABCL, which was earlier demerged from the new Grasim Industries Ltd. Because of its demerger, a portion of the Grasim’s enterprise value gone out thereby reducing its market value to some extent.
In June this year, Azim Premji invested in ABCL by purchasing 2.2% stake for Rs 703 crore thus the price per share fixed at Rs 145.40. This deal put the EV (Enterprise Value) of ABCL at Rs 33,000 crore. However, as it was a stake sale and a pre-listing deal markets seem not bothered about Premji valuation. That is why it has been trading in the unquoted private market at Rs 220-250 range. This price is expected by them to be listed price.
In the meantime, Ultra Tech Cement Ltd completed the purchase of cement plants from Jaiprakash Associates, and Jaypee Cement Corporation Following the acquisition, Ultratech’s cement capacity reached to 93 million tonnes per annum from the existing 71 million tonnes per annum. This increased its enterprise value. All this happened after the restructure of Aditya Birla Nuvo and Grasim. The acquisition is an additional value to Grasim Industries since Ultra Tech is now a part of it. So, it should reflect in the share price. The traders and investors are of the view that expanded cement valuations have not been fully factored in new GRASIM.
There is another point. The listing of ABCL shares will also enhance the Grasim Industries Market Capitalisation. The general notion is that if ABCL share listing price is more than Rs 145 GRASIM market capitalisation may go up. And we may expect 10% price appreciation in GRASIM share.