Blue Dart shares slump on promoter's plan to dilute stake

R.Y. Narayanan Coimbatore | Updated on March 12, 2018

The German parent which has a majority stake in the logistics company Blue Dart Express Ltd has said it will dilute its stake to comply with the SEBI norms on minimum public shareholding.

However, the markets have taken a negative view of the decision with the stock coming under heavy selling pressure.

Deutsche Post DHL, which holds 81.03 per cent stake through its subsidiary DHL Express Singapore Pte Ltd. in Blue Dart Express Ltd, has said that it would reduce its holdings so as to enable Blue Dart Express Ltd to meet the minimum public shareholding requirements of at least 25 per cent by June 3, 2013.

The company, while not specifying the time frame or the route it would take to comply with the SEBI rule, said in a release that it will "follow through with its intention subject to market conditions and/or the applicable regulatory framework". It assured that the future collaboration between Blue Dart Express Ltd and Deutsche Post DHL will not be affected by this transaction at all and "Deutsche Post DHL remains fully committed to the Indian market".

In a communication to the stock exchanges, the parent company had stated that the objective of the proposed reduction was to increase public shareholding to meet the norms. At present, the public shareholding in the company's equity of Rs 23.73 crore is just 18.97 per cent. It said its intention was that both companies should continue to cooperate as they have been doing earlier. It also assured that the relationship between the two companies would not be hit by the proposed dilution since the "primary aim" for the reduction was to comply with local regulations.

In the quarter ending June 30, 2012, the company registered a net sales of Rs 430.06 crore (Rs 370.94 crore) and the net profit was Rs 40.63 crore (Rs 34.01 crore). The EPS was Rs 17.12 (Rs 14.33). For the full year last year (Jan-Dec 2011), the net sales was Rs 1492.71 crore, net profit was Rs 122.24 crore and the EPS was Rs 51.52. The operating profit margin also had shown improvement at 15.16 per cent in the quarter ending June this year compared to 13.43 per cent during last year(FY '11).

After the company's announcement, the stock took a pounding in the market today. By 10 a.m., the BSE had witnessed a trading volume of about 21,034 shares which is nearly 23 times the two-week average volume of about 920 shares. The stock lost Rs 241.10 or 12.60 per cent to trade at Rs 1,672.30. Its weekly high is Rs 2,000 on the BSE.

It is not clear whether the market was expecting the company to delist the shares. From a 52-week low of Rs 1,380 on November 30 last year, it touched a high of Rs 2,205 on April 19 this year and has been relatively holding firm since then. While Blue Dart's parent company has not specified the route it would take for stake dilution, the recent announcement by SEBI Chairman UK Sinha that companies could use the bonus/rights issue route that was open only to non-promoters to comply with the minimum public shareholding norm throws up interesting possibilities.

Published on September 04, 2012

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