Shreyas Shipping shares: This smallcap stock hits upper circuit; Here's why

Shares of Shreyas Shipping and Logistics hit an upper circuit of 20 per cent on Monday amid the delisting buzz of the smallcap company. Shreyas Shipping, owned by Transworld Holdings, a leading player in the coastal shipping sector and is engaged in owning and operating container feeders.

Transworld Holdings announced its intention to voluntarily delist the equity shares of its Indian subsidiary, Shreyas Shipping & Logistics, in accordance with Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2021 from NSE and BSE.

The company board of Shreyas Shipping and Logistics would meet on Wednesday, May 24, to consider the proposal for the voluntary delisting of the equity shares by the promoter entity Transworld Holdings, the company said in a regulatory filing.

Transworld Holdings intends to acquire all equity shares of the company that are held by public shareholders and consequently voluntarily delist the equity shares of the company from the BSE and NSE by making a delisting offer.

Shares of Shreyas Shipping hit an upper circuit of 20 per cent to Rs 312.60, following the announcement of delisting, commanding a total market capitalization of 686.39 crore on Monday. The shipping counter had settled at 260.50 in the previous trading session.

NovaaOne Capital Private is the manager to the offer for and on behalf of the promoter, while JSA Advocates & Solicitors are acting as legal advisors for the same.

Explaining the rationale for the offer, the Transworld Group said that delisting of Shreya Shipping would enable it to obtain full ownership of SSL, which in turn will provide enhanced operational flexibility. It eyes to refocus on the business, with no dedicated management time to comply with the mandatory listing norms in a cost effective manner.

The price will be determined through the reverse book building mechanism set out in the Delisting Regulations, Transworld Holdings added. "The proposed delisting of SSL will provide public shareholders of SSL an opportunity to realize immediate and certain value for their equity shares," it added.

For the quarter ended on March 31, 2023, the company reported a consolidated net profit at Rs 18.05 crore, with total income from operations at Rs 81.09 crore, while profit for the year stood at Rs 196.9 crore with a revenue at Rs 483.78 crore. The company board also recommended a dividend of Rs 1.5 per equity share.

Siddharth Oberoi, Founder and CIO at Prudent Equity, sees this as a big positive and shows the commitment of the promoters to business so much that they are willing to buy the whole company. The current delisting provides an excellent opportunity for existing members and shareholders to exit at a significant premium from the current market price, he said.

"Although the entire delisting to go through is completely dependent on the promoters to accept the bid price which will be discovered through the reverse book building process. The company is highly undervalued at the current levels and we believe the promoters would be getting a steal even if they are able to buy-out the company at Rs 400 per share as well," he added.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Business Today)

Also read: Adani group m-cap tops Rs 10 lakh crore as Adani Enterprises, Adani Ports, Adani Wilmar, Adani Power shares rally

Also read: Adani Enterprises, Adani Ports & Adani Wilmar shares jump up 9% today; here's why