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A big news is coming out which is creating a stir in the Indian stock market and corporate world. A mega block deal is going to happen for the shares of the country’s leading biopharmaceutical company ‘Biocon Ltd’ based in Bengaluru. According to reputed media reports, ‘Active Pine’, a major unit of the famous investment firm True North, is preparing to sell crores of shares of the company in huge quantities through a block deal as soon as the market opens. A total of 1.66 crore shares are likely to be transacted under this mega deal, the total financial value of which is estimated to be around Rs 639 crore. Ever since this big deal came to light, the eyes of all the big investors, traders and mutual fund houses of the stock market have been fixed on the shares of Biocon. Let us understand in detail all the aspects related to this mega block deal, the financial data and its impact on the stock market.
The outline of this big block deal going to be done in Biocon Limited is completely ready. According to Bloomberg report, ‘Active Pine’, a unit related to True North Entity, is going to sell a major part of its strategic stake in the open market through a block deal. A total of 1.66 crore shares will be sold under this proposed deal. Floor price of Rs 385 per share has been fixed for this block deal. If the total shares are calculated on the basis of this fixed floor price, then the total market value of the offered shares comes to approximately Rs 639 crore. Due to simultaneous selling of such a large quantity of shares, when the stock market opens tomorrow, Biocon shares may see huge volumes and a huge increase in trading activities. The eyes of investors and market analysts will be focused on who are the buyers of this deal.
According to the official and initial market information available at present, this is a Proposed Block Deal. The final and actual sale of shares, the final price of the deal and the exact details of the major buyers or institutional investors participating in it will be officially known only after the deal is fully executed. Whenever a block deal at this level is executed by promoters or private equity firms in a big company, there is some movement in the stock prices in the short-term. However, it is important for long-term investors to understand that such mega deals are often part of portfolio restructuring or profit booking strategic priorities of the respective companies.
Just before the news of this much talked about block deal broke, the performance of Biocon Limited shares in the stock market looked very balanced and stable. At the close of trading on Tuesday, Biocon shares closed flat at Rs 392.55, showing a marginal decline of just 0.24 per cent from its previous closing price of Rs 393.50. During today’s entire trading session, Biocon shares touched a high of Rs 399.50 and a low of Rs 390.90. If we look at its last one year performance, the 52-week high of the company’s share has been Rs 447, while its 52-week low has been recorded at Rs 337.20. At present, the total market capitalization of the company at this price remains around Rs 63,974 crore.
According to a screen of technical and fundamental data of the stock market, the Price to Earnings Ratio (PE Ratio) of Biocon Limited has remained above 50 for the last four consecutive quarters, indicating a slight premium to its valuation. The volume weighted average price (VWAP) of the stock was recorded at Rs 395.50 during trading. According to the rules of the exchange, the upper circuit i.e. upper price band for this share has been set at Rs 403.15 and the lower circuit i.e. lower price band has been set at Rs 379.75. Since this massive block deal of Rs 639 crore will be processed as soon as the market opens tomorrow, investors are advised to keep a close eye on the company’s fundamentals, final buyers of the block deal and volume action before taking any hasty decisions.