Escorts Open Offer: Rakesh Jhunjhunwala backed-firm gets Sebi's nod; what should investors do in this counter?

Rakesh Jhunjhunwala backed-firm Escorts has received Sebi's nod to float open offer for stake purchase by Kubota, Japanese agriculture machinery manufacturer. The notification from the exchanges and letter of offer are expected to be out in the next few days. Ace billionaire investor Jhunjhunwala, who raised stake in Escorts, holds 75,00, 000 shares worth 5.68% stake in the auto giant, as on February 18, 2022, showed latest shareholding pattern of the company on the BSE.  

In November, Kubota had announced that it will acquire a majority stake in Escorts for Rs 9,400 crore through a preferential allotment and an open offer. 

As on Febrary 18, 2022, Kubota Corp holds 2,16,21,414 shares of Escorts, which translates into 16.39. It plans to raise its stake by more than 50% in this  Jhunjhunwala backed-stock.

See Zee Business Live TV Streaming Below:

"We expect the open offer to commence anytime in the next two to three weeks and the tendering period to close 2 weeks after the start date. Completion of payment of consideration or return of equity shares to the public shareholders can spill over till the start of April. We will get exact timelines once the letter of offer is published, " says Abhilash Pagaria, Edelweiss Alternative & Quant Research.  

Ideally from March 01, the entire open offer process should not take more than five to five and a half weeks for completion, he says.   

Escorts open offer acceptance ratio 

As per Pagaria, if the stock rallies up to Rs 1950, the final acceptance would be around 80% and the ratio is likely to hit 100% in case the stock price moves nearer to Rs 2,000 or above.  

What should investors do with Escorts?  

"In case the stock moves nearer to 2,000 or above, then the acceptance would be 100% and it’s better to sell shares on screen instead of tendering," said Edelweiss Alternative & Quant Research.  The analyst was of the view that current levels are lucrative and investors can consider further building positions in this stock. 

Meanwhile, Escorts shares were trading with nearly 1 per cent gain or higher by Rs 17.20 to 1869.30 per share in Wednesday's intraday trade on the BSE.  

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)