Market Movers: Shriram Group’s restructuring upsets STFC investors

MUMBAI: One of the most anticipated corporate restructuring of the year is finally here. Its announcement has largely brought happiness to all stakeholders involved, except from investors of Shriram Transport Finance.

Shriram Group announced that it would be demerging its financial, life insurance and general insurance business out of Shriram Capital. Merging the remaining business of Shriram Capital into Shriram Transport Finance and also subsuming Shriram City Union Finance into Shriram Transport.

While the restructuring promises better synergies and more efficiency, the swap ratio proposed by the group for Shriram City Union’s merger with Shriram Transport irked the latter’s investors as it is more expensive than previously thought.

Shriram City Union’s investors will get one share of Shriram Transport for every 1.55 shares held by them. This is more expensive than the 1-for-3 swap ratio that analysts were working with. Swap ratio aside, analysts are positive that the merger will work in favour of shareholders in the long term.

Minda Industries swings for the fences
While the electric vehicle (EV) revolution is yet to take off on the Indian roads, auto-ancillary company Minda Industries is rolling up its sleeves in preparation for D-Day.

On Friday evening, the auto-ancillary company announced a JV with Germany-based FRIWO to manufacture and supply various EV components in the sub-continent region. The partnership will provide Minda Industries with technical know-how and the ability to tap a potentially large addressable market.

For the company, the JV also brings in the missing pieces that complete its electric vehicle drive chain offering to potential EV manufacturers in India.

Nerves ahead of big day
Tuesday is a big day in the history of ITC and its investors are palpably nervous. The company will host its first-ever investor/analyst day that got the Street excited last week.

Shares of the company jumped over 7 per cent last week in anticipation of the big day. The announcement was seen as fresh steps towards greater engagement with the investment community and towards transparency. However, investors appeared a bit tentative as they resorted to profit booking ahead of the big day. Shares of ITC ended nearly 1 per cent lower.

On Tuesday, investors expect clarity from the management of ITC on future growth plans, capital allocation strategy and, hopefully, some information on any potential demerger. Given the hype, the possibility for disappointment is large.