Essar Shipping must list above Rs 42 for traders to profit
Essar Ports, after demerger from Essar Shipping & Ports (ESPLL), listed yesterday at Rs 75, lower than previous closing price of Rs 94.87 (as on May 17). It settled the first day trade at Rs 121.35 a share on the Bombay Stock Exchange on May 31.
ESPLL’s share capital has been split in the ratio of 2:1. For every 3 shares held of ESPLL, shareholders have received 2 shares of Essar Ports and 1 share of Essar Shipping.
Earlier three shares of ESPLL were valued at Rs 284.61 (3 shares * Rs 94.87 closing price of ESPLL on May 17) and now two shares of Essar Ports valued at Rs 242.7 (2 * Rs 121.35 closing price of Essar Ports). Break even point for an investor comes to Rs 41.91 (Rs 284.61 – Rs 242.7) which means that investors holding shares of ESPLL will make profit when Essar Shipping (the resultant company), will list above Rs 42. Essar Shipping is likely to list in July.
The existing Essar Ports capacity includes 58 MMTPA cargo handling capacity at Vadinar port and 30 MMTPA at Hazira port. The utilization in FY 2010-11 was 40 million tonnes, with ports contributing revenues of Rs 732 crore and EBITDA of Rs 534 crore.
With ESPLL successfully demerging and trading as Essar Ports, the share capital of the company has therefore reduced from 61.5 crore shares to 41 crore shares. Remaining 20.5 crore shares are with Essar Shipping.
ESPLL’s share capital has been split in the ratio of 2:1. For every 3 shares held of ESPLL, shareholders have received 2 shares of Essar Ports and 1 share of Essar Shipping.
Earlier three shares of ESPLL were valued at Rs 284.61 (3 shares * Rs 94.87 closing price of ESPLL on May 17) and now two shares of Essar Ports valued at Rs 242.7 (2 * Rs 121.35 closing price of Essar Ports). Break even point for an investor comes to Rs 41.91 (Rs 284.61 – Rs 242.7) which means that investors holding shares of ESPLL will make profit when Essar Shipping (the resultant company), will list above Rs 42. Essar Shipping is likely to list in July.
The existing Essar Ports capacity includes 58 MMTPA cargo handling capacity at Vadinar port and 30 MMTPA at Hazira port. The utilization in FY 2010-11 was 40 million tonnes, with ports contributing revenues of Rs 732 crore and EBITDA of Rs 534 crore.
With ESPLL successfully demerging and trading as Essar Ports, the share capital of the company has therefore reduced from 61.5 crore shares to 41 crore shares. Remaining 20.5 crore shares are with Essar Shipping.
