Edelweiss Financial Services

Stock Opportunities
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If anyone could explain the demerger situation with the EAAA business. How it will unlock value for the shareholders? With Nuvama, the EFS shareholders got Nuvama shares. This time it’s OFS, should we keep cash handy to purchase EAAA shares or buy more of Edelweiss shares to benefit?

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1374

in EAAA IPO no direct benefit to shareholders of EFS, like in Nuvama demerger & subsequent listing - EFS shareholders got direct equity shares in Nuvama.

Only benefit is indirect i.e.:

  1. When EAAA will list, it will establish it’s market cap → since EFS will hold a majority stake like 75% to 80% to 90%-> so holding value will be established (which will of course fluctuate based on underlying CMP of EAAA shares)

  2. Fund raised by EFS through IPO of EAAA, may be used to repay corporate level debt (if used in good faith) - which will reduced debt obligation as well as interest payout

  3. EFS overall value will factor in discounted holding value in EAAA.

  4. At 97 CMP, EFS market cap is approx. Rs 9150 Cr. Based on available info in public domain about potential market value of EAAA, you can assume what would be discounted holding value in overall valuation of EFS.

Disc: Invested in EFS.

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