Tejimandi Newsletter: Investors seek SEBI's intervention over delisting

Once again, it's the possibility of finding a cure of Covid 19 that led the markets to erupt across the globe. The Indian market, so far mirroring the sentiments of the wall street, also couldn't stay aloof. It made a decent comeback after yesterday's drubbing albeit, closed significantly lower, off the day's highs.

On today's news platter, US based Moderna's experimental vaccine is our main course item. Global markets erupted and India followed suit after Moderna's first trial on human volunteers gave promising results. The company expects to begin its final-stage trial in as early as July. The news provided a great antidote for the global markets.

Indian market also received a much-needed respite after the package fiasco. Sensex closed 0.56% higher at 30,196.17 while Nifty gained 0.63% to close at 8,879.10 on back of the strong short covering. Bharti Airtel (up 11.29%), Adani Ports (up 8.83%) and ONGC (up 5.83%) were the major gainers while UPL (down 9.62%), Vedanta (down 2.70%) and (IndusInd Bank (down 2.38%) were the major losers of the day.

In India, the pandemic continues to rear its head as the total case count has risen to 1 lakh with Maharashtra, Gujarat and Tamilnadu continuing to be the major contributors while Goa, which was earlier declared corona-free, is again seeing a resurgence in the number of cases.

Opportunistic delisting: Will SEBI intervene?

After Vedanta limited, Diageo- the British liquor giant, is also apparently mulling to delist United Spirits from the Indian stock exchanges.

While delisting the company could give promoters better operational control, the timing and intention of both the promoter groups here are under serious questions. The promoters are seen using depressed valuations to buy out their companies at the expense of minority shareholders.

While speculations are abuzz on Diageo's possible move, many questions are raised on Vedanta's decision to go for delisting. The market sees Vedanta's attempt to buy out shareholders at Rs 87.50/apiece as an opportunistic move and clear mockery of the system. The fundamental value of the company is seen at a far higher price then what is being offered.

Key takeaways:

The hapless investors are now expecting SEBI to prevent the exploitation of minor shareholders. Here, the question is, should promoters be allowed to use lower valuations as an opportunity to delist? The least market regulator could do is to allow delisting at a fair price and protect the interests of the minority stakeholders.

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