Prestige Estate Projects Eyes IPP Route To Increase Public Shareholding

In an effort to meet the minimum public shareholding norms laid down by SEBI, the promoters of Bengaluru-based realty firm Prestige Estates Projects (PEPL) are planning to issue 4.26 crore shares through the Institutional Placement Programme (IPP) route. In case of oversubscription, the company can allot up to 0.42 crore of additional equity shares to the eligible qualified institutional buyers. Currently, the promoters hold 80.01% stake in the company.

The price band or the floor price, as the case may be, and the issue opening and closing dates for the issue have not been decided yet, but will be announced at least one day prior to the issue opening date. At its CMP, PEPL may be able to raise around Rs 800 crore through the issue. The stock is currently trading 1% below its previous closing.

We had recommended this stock in our magazine (‘Where to Invest in 2013’, DSIJ Vol. 28, Issue 2, dated Jan 13, 2013) on the basis of the company’s strong fundamentals as well as the  improving macroeconomic conditions conducive for such companies. Although the scrip made a high of Rs 191 post our recommendation, it is currently trading marginally below our recommended price of Rs 178.

Although the issue of shares will dilute the earnings, the NAV will largely remain unaffected as the increase in shares will be partially covered up by the cash raised through such issue. Hence, we advise investors to remain invested in the stock.

We will keep our readers on further developments with regard to the issue. Watch this space