NEW DELHI: Shares of Prabhat Dairy on Tuesday gave up gains, but still traded 13 per cent higher in morning session.
The stock came off even as its Rs 1,700 crore stake sale deal is much bigger in value than companys total market capitalisation of Rs 900-odd crore.At 10.20 am, scrip was at Rs 106, down 5 per cent from its days high of Rs 111.65 on BSE.
The Maharashtra-based company has struck a definitive deal to sell its milk-processing business for about Rs 1,700 crore through a slump sale.
After deal, Prabhat will focus on its cattle feed business and expand into allied businesses such as animal nutrition and genetics.
The business is sold for 1.1 times sales as value of sale combined is Rs 1,700 crore and revenue generated is Rs 1,529 crore.
Following deal, stock surged 20 per cent in early trade, only to surrender some gains.
We are negative on deal as promoters are selling 98 per cent of total company revenues, but Prabhat Dairy shareholders will only benefit for 29 per cent of sale value.
This is because Prabhat Dairy owns direct 29 per cent of company being sold and promoters hold rest through another firm Cheese Land Agro, said Sameer Kalra, Equity Research Analyst and Founder at Target Investing.
"The company could have merged company with Prabhat Dairy and then sold business, analyst said.