Retail investors to gain from Adani's takeover bid for NDTV: Analysts

Retail shareholders/investors stand to gain the most in the short-to-medium term from Gautam Adani group’s takeover bid for Prannoy Roy and Radhika Roy-controlled New Delhi Television Ltd. (NDTV), said analysts.

The surprise element in the entire development, however, according to Ambareesh Baliga, an independent market analyst, was the deal structure. 

“Vishvapradhan Commercial Pvt Ltd (VCPL) – a subsidiary of Adani Media Ventures Ltd (AMVL) – was bought by them at Rs 114 crore when the value of the warrants was close to Rs 800 crore, which is surprising. Public shareholders will not tender shares at a discount to the market price. However, there is one large shareholder – a fund holding close to 9.75 per cent stake in NDTV – and it will be interesting to see how they react. It could tilt the balance. Public shareholders will benefit the most if the stock price moves up in the short-to-medium term. There are chances that the promoters may challenge this move and it could all be a long drawn affair,” Baliga said.

Meanwhile, in an exchange on Tuesday NDTV said that VCPL has exercised its rights to acquire 99.50 per cent control of RRPRH - the promoter-owned Company that owns 29.18 per cent of NDTV - without any discussion with the company or its founder-promoters. The open offer price of Rs 294 apiece is nearly 20 per cent lower than Tuesday's closing price when the plans were unveiled.

 

At the bourses, NDTV has been one of the best performing stocks. In the past three months, the counter has gained nearly 140 per cent, as compared to 8 per cent rise in the S&P BSE Sensex during this period. In the last one year, NDTV has soared 382 per cent as against 6 per cent rally in the S&P BSE Sensex. On Wednesday, it hit the upper circuit filter of 5 per cent at 384.5 and traded at its highest level since August 2008.

The open offer for 26 per stake in NDTV, according to the document released to the stock exchanges on Tuesday evening, has been valued at Rs 493 crore. If the open offer goes through, Radhika Roy and Prannoy Roy will be left with a residual stake of 32.3 per cent in the broadcaster.

“Though I am not a big fan of media companies purely from a fundamental standpoint, in NDTV's case, the retail shareholders will stand to gain if the stock price continues to move up. I do not think that Adani's will revise the open offer price upwards as things stand. Retail investors who bought NDTV stock at a much lower rate will be better off selling them in the secondary market rather than tendering them via the open offer,” said A K Prabhakar, head of research at IDBI Capital.