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United spirit sell stock worth 350 million , is it good for existing shareholder ?

dipak's picture
Submitted by dipak on October 16, 2009 - 01:36

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Submitted by dipak on October 16, 2009 - 01:41. #

Mr Malya hinted about it few days ago and it finally happend United Spirits Ltd raised $350 million by selling shares to institutional investors, as per report in Bloomberg.

United Spirits sold the shares at 913.7 rupees apiece. Interestingly stock rose almost 50 Rs yesterday, looks like news was already out. On one side its good for company as it can reduce debt burden, but other side these new shares will increase no of outstanding shares that means any profit will be divided among more no of shares and hence eps will go down. Is it good or bad ?

I think United will benefit in long term . In medium term definitely EPS will be down and hence stock looks expensive but don't forget that united has good solid brands in its portfolio and India is just started drinking.

Good stock for long term, I would be cautious in medium term though. Buy it as cheap as you can get.

 

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