Being in company of logical and rational people makes life pretty boring!!!
We need some logically challenging, brain dead, System-1 dependent people to make life funny and interesting. (For details for System-1 and System-2 and their workings, Read this.
Delisting cases are a perfect example of this theory at work. Give the powers of delisting to rational and logical institutional investors (These guys are also not absolutely rational but are more rational than retail investors) and you will come across pretty boring cases of India Sec, UTV and Patni Comp delisting.
But, try giving the majority of powers to irrational retail investors, you will get Afla Laval and Chemplast Sanmar kinda interesting cases.
Lets talk about Chemplast only as the rest is Past. Promoters announced the intention of buying back 25% of outstanding shares some time back. Now after the tendering process, the discovered price has come out to be Rs 15 per share (All thanks to retail investors). Currently the stock is quoting at only Rs 7.3. So, there is a possibility of 100% gain if promoter group accepts the dicovered price.
Will the promoters accept this price?
I see that as a low probability event. Company is going through a tough time and has been making losses for past 3 years and has high debt also. Offer doc clearly highlights these points.
Though Sanmar group has a number of companies but financial numbers don't look convincing enough for going through the delisting at such a high price.
However, the stock has an all-time high of 22/-. So if promoters think that the business will improve, they should go through the delisting.
Lets see what happens. I am gonna watch only from the sidelines.
We need some logically challenging, brain dead, System-1 dependent people to make life funny and interesting. (For details for System-1 and System-2 and their workings, Read this.
Delisting cases are a perfect example of this theory at work. Give the powers of delisting to rational and logical institutional investors (These guys are also not absolutely rational but are more rational than retail investors) and you will come across pretty boring cases of India Sec, UTV and Patni Comp delisting.
But, try giving the majority of powers to irrational retail investors, you will get Afla Laval and Chemplast Sanmar kinda interesting cases.
Lets talk about Chemplast only as the rest is Past. Promoters announced the intention of buying back 25% of outstanding shares some time back. Now after the tendering process, the discovered price has come out to be Rs 15 per share (All thanks to retail investors). Currently the stock is quoting at only Rs 7.3. So, there is a possibility of 100% gain if promoter group accepts the dicovered price.
Will the promoters accept this price?
I see that as a low probability event. Company is going through a tough time and has been making losses for past 3 years and has high debt also. Offer doc clearly highlights these points.
Though Sanmar group has a number of companies but financial numbers don't look convincing enough for going through the delisting at such a high price.
However, the stock has an all-time high of 22/-. So if promoters think that the business will improve, they should go through the delisting.
Lets see what happens. I am gonna watch only from the sidelines.
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