How will the ROE gets impacted if the business acquires other companies?
Acquisitions can be ROE accretive, degressive and neutral. Depends on a lot of factors like operating metrics of the target company relative to the acquirer, how the purchase was made (shares, cash, debt), the price of acquisitions (whether at a premium or depressed valuations), etc.
While the analyst community focuses on effects of acquisitions on current EPS, ROE divergence provides a better wholesome picture of the acquisition.
Take an ex. where cash on B/S was used to pay for an acquisition. Suppose this cash was earning 5% pa.
Now if the company being acquired at book value, earns more than 5% ROE then this will be ROE accretive. This is a simple theoretical example.
Debt-financed acquisitions bought at a premium bring in added complexity of adjusting for cost of debt, tax implications and the premium paid.
Some acquisitions can be a turnaround story, where initial ROE maybe depressed and later on if turnaround is successful, ROE of the whole entity improves.
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Piramal Enterprises explores re-entry into Indian formulations business
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It’s high time i believe the demerger should happen as the holding company discount is getting too much into
Rights issue record date is Feb 1 @2380 http://www.bseindia.com/xml-data/corpfiling/AttachLive/ce34334b-a24f-4ac8-a628-142b5ab8a038.pdf
How we can apply for Right Issue?
Can you please share the process and date when it will open
Record date is to find the eligibility of existing shareholders. Ratio - 1 share can be applied for 23 held.
What if someone has less than 23 shares? Can we sell our proportionate rights entitlement?
If yes then how?
Thanks.
I am not sure if the rights are renounceable (transferable). We need to check this with the management.
Regarding shares not in exact multiples of 23 or less than 23, usually the fractional entitlement of such eligible equity shareholders shall be ignored. Though, eligible equity shareholders, whose fractional entitlements are being ignored, are usually given preferential consideration for the allotment of one additional equity share each if they apply for additional equity shares over and above their rights entitlement.
Those eligible equity shareholders holding less than 23 equity shares will therefore be entitled to zero equity shares.
This is usually the case with right issues. We need to wait and see the exact terms for piramal.
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Usually when you have less than 23, you will be entitled to zero. But you can apply for additional shares that people did not apply for. When you have zero entitlement, you cannot sell those rights.
have not subscribed to rights so far. So I have question.
Is the rights subscription available only through paper mode or it is available through electronic mode as well. If electronic, anyone can share how to go about it? Thank you.
Disclosure: Not invested but follow.
Ajay Piramal has expressed his desire to de-merge business this year. I am sure he will do it when it is best.
@ramanhp Can you share the link highlighting the same . Also ,is it a comment by promoter or an interpretation of his statement ?
Please check this interview…especially the last question.
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This was in 2016.
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I have 25 shares of pel but in two demat accounts(10+15). Can I apply for rights issue?
Since QIP is done in 2018, AP would not rush de-merger in this year. My guess is it will happen in 2019. This gives company time to deploy QIP money effectively. This will also give housing finance business to develop more.
Oh, yes, u r right . I think then from June 18 to June 20 ,this could happen if he sticks to his plan