Shares in Shree Renuka Sugars jumped as much as 7.3 per cent on Friday on reports of talks to buy Brazilian Equipav has fallen through with a slide in sugar prices, dealers said.
Analysts and dealers view this move as positive for Renuka as concerns of assuming huge debt in the books were seen receding.
“If they (reports) are true, that much less debt will be there in the balance sheet,” said Bhavesh Gandhi, analyst at India Infoline.
“And the company will have more resources to focus better in the domestic business. This, if true, will definitely reduce the debt burden,” said Gandhi, who has a ‘market performer’ rating on the company with price target of 69 rupees.
Sugar and ethanol maker Equipav has begun parallel talks with two alternative bidders – Bunge Ltd and Hong Kong-based trading firm Noble Group- the paper said, citing three sources involved in the deal.
In February, Shree Renuka had announced intention to acquire a controlling 51 per cent stake in the diversified sugar firm from Brazil, the world’s biggest producer. At 1.14 p.m., shares were up 6.44 per cent at Rs 58.65 in a firm Mumbai market.