Prabhat Dairy, in its filing on exchanges, said one of the reasons to delist stock is that the company is no longer operating in its core dairy business
Shares of Prabhat Dairy ended the day with 20% gains after the company proposed to voluntarily delist its equity shares. Shares of Prabhat Diary on Friday ended the day at `78.15, up by `13, or 20%, on BSE.
Prabhat Dairy, in its filing on exchanges, said that one of the reasons to delist the stock is that company is no longer operating in its core business, which contributed majority to the revenues and profits of the company.
In January this year, Prabhat Dairy had announced that it has entered into definitive agreements with Tirumala Milk Products, a wholly-owned subsidiary of French dairy multinational Groupe Lactalis, for the sale of its dairy business for a consideration of `1,700 crore.
The transaction involved sale of the dairy business undertaking of Prabhat Dairy by way of slump sale on a going concern basis, along with the sale of 100% shareholding in Sunfresh Agro Industries, a step-down subsidiary of Prabhat Dairy. “After the business sales, the company is no longer operating in its core business, which contributed majority of the revenues and profits of the company. We understand and recognise that a majority of the public shareholders would have invested in the company, with the intention of investing in a company engaged in the dairy business,” company said in the exchange filings.
Market participants say that, once company talks about delisting, the valuations of the company automatically improves. According to an analyst, in the dairy business a player can have prospects if some value-addition happens. If it is a pure dairy business, which Prabhat was into, it will not give better valuations. In the recent past, diary business is facing margin pressure due to an increase in the milk procurement price.
In the last six months, the stock has gained 37%, while in the last one year, it was fallen by 51%, show data from Bloomberg. The market capitalisation of Prabhat Dairy on Friday stood at `763.34 crore.
The company, in its exchange filing, said: “We either individually or collectively as may be mutually agreed, are desirous of acquiring 4,87,40,547 fully paid-up equity shares of the Company representing 49.90% of the paid-up equity share capital of the company that are presently held by the public shareholders of the company and consequently voluntarily delist the equity shares of the Company from BSE Limited and National Stock Exchange of India.” Shares of Prabhat Dairy were listed on exchanges in September 2015.