The share price of Shriram Transport Finance Corporation gained over 2 percent in early trade on Tuesday after the company’s board approved raising funds via qualified institutional buyers (QIB) and preferential allotment to promoter entity Shriram Capital.
The floor price is set at Rs 1,439.90 per equity share and warrant.
The board approved the issue price of equity at Rs 1,440 per share including a premium of Rs 1,430 per share. It has approved Rs 1,440 per warrant, 25 percent payable upfront and balance payable at the time of conversion into equity shares.
The company proposed to issue up to 17,36,100 equity shares and 17,36,100 warrants.
The company board also approved the opening of the QIB issue and fixed a floor price of Rs 1,433.32 per share for the QIP offering.
Global brokerage Jefferies said that the fundraising will result in dilution of 7 percent on shares and can lift FY22-23 profit by 6-9 percent and adjusted book value per share (BVPS) by 6 percent.
Tier-I CAR may rise by 100 bps and can support growth/ratings, Jefferies said. It, however, maintained an Underperform rating with a target price of Rs 1,130 per share.
Morgan Stanley said the promoter will invest Rs 500 crore via equity shares and warrants and this issuance should further help funding access & costs. It has an Overweight call with a target price of Rs 2,000 per share.
At 11:39 am, the stock was trading flat at Rs 1,488 apiece on the BSE.