I agree that this dilution could have happened later but seems raising funds from banks/market would have been challenging for IBH and hence to provide more confidence to market there is fund dilution. Also, opportunity for exisiting investors.
Last time QIP was also done below BV by erstwhile old promoters/Sameer and seems management are best people to take this call between equity dilution/growth capital.
Would there be equity dilution for a shareholder only if an existing doesn’t participate fully? Or does it favour majority shareholders over minority shareholders?
I don’t see rights entitlements in my demat account yet. I use ICICIDirect. Please confirm if you are seeing right entitlements in your Demat account.
There would be no dilution if a shareholder subscribes to right issue. Alternatively rights entitlement can be sold at fair price if shareholder is not interested to subscribe. Rights issue will be dilutive only if a shareholder does nothing i.e neither subscribes nor sells rights entitlement.
Just a small doubt. I know that the right entitlement gets traded in the market. So, the RE share will be credited to our Demat account during the time of application, like Skipper RE gets traded??
Am I right?
At the time of rights issued by VI, I had the right, but I didn’t get anything credited to my Demat account. I only got an envelope at my address.
Rights entitlement started trading today
Yes it’s open from yesterday(7 Feb)
I got the RE but unable to sell it
You need to place a limit order. Market orders are not being accepted.
On what basis does the prices of these REs fluctuate? The stock closed at 189.20 and the RE closed at 46.50. So someone buying the RE will end up paying 46.50 + 150 = 196.50 for the stock.
Why would anyone buy and pay more for the stock this way? Can someone explain?
Maybe it has to do with the fact that only 50rs is due now and the rest callable at a future date so investors might be taking a gamble and betting on good growth coming. I could be totally wrong.
Overtly optimistic. The truth is that most of their loans are stuck. They are not able to raise money easily!! They issued ncds many times. At the interest rate of 10.75 percent and yet they barely get subscribed to the minimum. They try to raise for 1k cr and it barely gets subscribed 110-120 cr!! The issue cost takes the effective interest rate for money raise to 12.5-13 percent!!
Given that management has again got approval of raising 3500cr equity, while 66% part payment of rights are also pending, and they plan to wind down legacy loan book, seems lot of provisioning is under way as they are targetting the book value to increase by only 25% in 2 years.
Lets hope the tide turns into their favour
I’m sorry if I’m asking a dumb question I’m new here, but when did the management give this target of increasing book value by 25% in 2 years?
@ Naval Latest concall
I feel Strategic divestment by QIP is likely in coming year.
Also , expected higher dividends in coming years and IBH trading at 0.6-0.7 BV makes a value addition at current rates.
Disclosure- Invested from lower levels and pyramiding
I don’t get this. The book value per share should be around 320 according to my calculations. That give P/B ratio of 0.5, please let me know if I’m wrong?
As per Screener:
Reserve:19679
Equity : 113
No of Shares: 73.9
Bookvalue:19679 + 113/73.9=267.8
I do it this way: Experts can comment.
