Emami shares end 15 percent higher after promoters sell stake

Shares of Emami rose almost 15 percent at Rs 407.6 on BSE on Tuesday after promoters sold a 10 percent stake in a block deal for about Rs 1,600 crore. Meanwhile,  the  S&P BSE Sensex ended over 400 lower from its day's high at 35,352.

The block deal was initiated by a group of investors like SBI Mutual Fund, IDFC, Premji Invest, L&T Mutual Fund amongst others. The stake sale will be utilized to pare promoter debt, which was used in creation of assets like cement and solar power, among others.

Macquarie views this stake sale as an apt strategy to resolve its funding issues of the other promoters' business. The brokerage house also believes that the current valuations are at the lower end of the band from the last 4-5 years.

"The promoter debt is to the tune of about Rs 4,000 crore in the group's unlisted companies. The sale will ease the liquidity position and also reduce promoter pledge of Emami shares from nearly 48 percent now," Emami Director Mohan Goenka told PTI. Post the stake sale, promoter holding in Emami Ltd will stand at 62.74 percent from 72.5 percent earlier.

Goenka also added, "We are committed to maintaining our significant majority stake in the company and do not anticipate any further dilution of stake in the foreseeable future."

Apart from the FMCG business, Emami Group also deals into several other businesses like cement, edible oil, media, retail, art, bio-diesels, hospital chain etc. Thus, the promoters would be able to redirect the funds towards other businesses for more development.