Equity Alert: Hindalco dn 5% after co approves 1-for-3 rights issue

[K.Karthik Raja]

Equity Alert: Hindalco dn 5% after co approves 1-for-3 rights issue
Friday, Jun 20
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Equity Alert: Hindalco dn 5% after co approves 1-for-3 rights issue
MUMBAI--1:30PM--Shares of Hindalco Industries was down 5% at 163
rupees
on worries of equity dilution as the company approved raising up to 50
bln
rupees via a 1-for-3 rights issue to part finance the bridge loan for
its
Novelis buy, dealers said.
The company said the rights issue price will be decided later.
"The stock is looking weak on charts and can touch 161-160 rupees.
Resistance is at 170 rupees," said a technical analyst.
The rights issue price would be the detail market would
await as it would determine the extent of equity dilution.
"If the rights issue price is significantly lower than current
market
price, then the equity dilution would be quite high. Hindalco can
afford
25-30% equity dilution," said Giriraj Daga, analyst, Khandwala
Securities.
"But whether the rights issue is a negative would be determined by
the issue price and whether Novelis' performance can be turned
around."
So far on NSE, 1.9 mln shares of the company have been traded. Its
June futures contract was trading nearly at par with spot, with 1.8%
rise in open interest.
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