Piramal Enterprises shares tumbled nearly 7% on Tuesday, a day after the Ajay Piramal-controlled company sold its entire stake of about 10% stake in Shriram Transport Finance Co. Ltd for approximately Rs 2,305 crore. “The company has sold its entire direct investment of 9.96% in the fully paid-up share capital of Shriram Transport Finance Company to third-party investors on the floor of the stock exchange,” Piramal Enterprises said in a regulatory filing.
“This divestment today is in line with our pre-stated intent and one of the steps of a broader strategy to leverage huge opportunities for strategic growth in our own financial services business,” the statement by Piramal Enterprises said.
After the stake sale on Monday, Piramal Enterprises shares had closed down 3%, while Shriram Transport lost nearly 6%. However, on Tuesday, the Piramal Enterprises stock extended its losses to close at Rs 1,864.95, down 6.9%, on BSE. Meanwhile, shares of Shriram Transport closed higher by 3.6% at Rs 1,055.
An Economic Times report pointed out that the Rs 1,652-crore investment in Shriram Transport generated a compounded return of just 6.5% in six years for Piramal Enterprises compared to 12% by the Sensex or Nifty in the same period. Piramal had invested Rs 1,636 crore for a 10% stake in Shriram Transport in December 2014, and Rs 2,146 crore for 20% stake in unlisted Shriram Capital in April 2014.
R Thyagarajan, founder, Shriram Group, told Business Standard that it was not a panic exit but a strategic one. “Piramal came in as an investor and, as a second step, he participated in the management growth and development, and it was perceived that he would take over the reins of the group. As an investor, anybody will look for exits for several reasons, and one possibility in this case could be Piramal may have found a new investment opportunity,” said Thyagarajan.
Comments
0 comment