A few months ago whenever an IPO came out, everyone was interested in purchasing it. This was so that when the IPO gets subscribed on the first day, they make good profits. Recently there was a company that didn't want their shares to trade in the market and they want to delist themselves from the share market. This company is called Vedanta. In this video we have told you what the implications will be if you are a retail investor, and whether you will face a loss if you have shares of this company.
Vedanta was a company that has a business in the mining industry It used to be called Sesa sterlite and Sesa Goa ltd. Its main business is in Goa, Karnataka and Rajasthan. In January 2018, its share price 330 and today it trades at Rs 90. The biggest reason behind Vedanta not performing well for the past some time is that the corporate structure of Vedanta is very complex. If a company continues to make subsidiaries, its corporate structure becomes very complex. The biggest reason they have given for delisting themselves is that they want to simplify their corporate structure. After simplification, they will be able to identify easily where they are deriving their value from. There are two ways of a company to delist.
The first is the voluntary way when the company delist themselves because they think that they aren't able to streamline their operations well.
The second way is involuntary, when the exchange forcefully makes the company delist. There can be many regulatory reasons behind this or when the company goes bankrupt.
Vedanta has said they are giving an indicative price of Rs 8, which can be changed at any time. Book building is when the company says that they want to dilute their shares so they sell it at a certain price. Reverse book building is the opposite of that. It's when the promoter says that they want to buy the shares There is a special voting in the process of delisting which takes the investors into consideration. When the resolution is passed with majority, the delisting process will be taken forward.
Vedanta has a P/E ratio of around 4, a book value of more than 150. Its dividend yield is more than 5. Their quarter on quarter increase in sales has been almost constant. Their quarterly revenue has been around 20-25,000 crores. There is a debt of 50,000 crores on Vedanta currently. Its operating profit margin is between 25 and 30.
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