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Samvardhana Motherson Shares Fall 9% After 5% Equity Changes Hands in Block Deals

Samvardhana Motherson shares plunged 9% after the block trade.

Shares of Samvardhana Motherson International fell 9% to Rs 69.55 on the NSE in intraday trade on Thursday after a nearly 5% stake in the auto parts and equipment company changed hands.

About 305.61 million shares, or 4.5% of Samvardhana Motherson’s total share capital, changed hands on the NSE as of 9:18 am. Meanwhile, on the BSE, exchange data showed that about 14.73 million shares changed hands, representing 0.22% of the company’s total share capital. The names of the buyer and seller were not immediately identified.

According to media reports, Sumitomo Wiring Systems Ltd (SWS) will sell 230 million shares, or about a 3.4% stake in the company today, through the stock exchange’s block trade mechanism. The base price for the deal is around Rs 69.90 per share (i.e., a 9% discount to the last closing price), with a total deal value of Rs 1,600 crore, according to reports.

Shareholding pattern data showed that promoter company SWS held about 17.55% of Samvardhana Motherson as of the December quarter.

SWS’ stake in the company will drop from 17.55% to around 14.15% following the deal. Given that the floor price was lower than the closing price of Rs 76.8 per share, the brokerage house expects the stock to open lower in today’s opening trade.

Also, despite the company’s recently announced healthy financial profile and calibrated acquisitions, the stock may not perform in short to medium term due to an intention to sell and still has a large equity balance with SWS, ICICI Securities said in a note.

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