GMM Pfaudler plunges 18% on block deal but may bounce back 45% - Analyst sees Rs 746 per share gains

GMM Pfaudler shares tanked 18 per cent intraday on the NSE on news of a likely block deal where nearly 1.34 crore shares will be on the block at a price of Rs 1700 per share. The stock was trading at Rs 1,654 on the NSE and was off day’s lows. The stock was down by Rs 270 or 14 per cent around 11:30 am. 

Notwithstanding the crash, market expert Siddharth Sedani sees this as a buying opportunity in GMM Pfaudler. This stock was earlier recommended by him in popular Zee Business segment ‘Sid Ki Sip’.  

Sedani, who is Executive Vice President and Head of Equity Products at Anand Rathi suggested a conviction buy in this stock even in the event of a block deal. He puts a price target of Rs 2400, estimating a 45 per cent or Rs 746 per share upside in this counter.  

GMM Pfaudler has business interests in corrosion-resistant technologies, systems, and services and offers them to chemical, pharmaceutical, food and energy industry.        

The stock has outperformed the Nifty50 index by 6 per cent over the 1-year period giving returns of 12 per cent versus 6 per cent given by the latter. According to a data sourced from Trnedlyne, the stock is trading at a price to book value of 11.1. 

Source: NSE

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The momentum indicators RSI and MFI are at 52 and 65 respectively. A number below 30 indicates an oversold situation while a number above 70 suggests that a stock is in overbought category. 

Also Read: IRCTC share price tanks 8% in 2 sessions as govt offloads 5% stake via OFS; expert explains why it is in a NO GO zone

Price Chart 

Source: NSE

A private equity player is likely to sell its stake in the company via a block deal as per media reports. The deal is likely to take place at a discount of 11.67 per cent per share. Axis Bank has been appointed as a broker for this deal.