Promoters Sells Big Chunk of DB Corp Shares

2 comments Written on April 10th, 2014 by
Categories: Stocks

DB Corp has just seen promoters sell big chunks of their stake. On April 9, they sold about 10% of the (unpledged) stake they owned, for about Rs. 159.6 cr.

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(Note: the Total Holding and subsequent columns refer to the shareholding BEFORE this transaction)

As a total of the company’s stock, this is only about 3% of the outstanding shares. Promoters, before this transaction, owned 74.94% of the company. Now they’ll own about 72%.

DB Corp is a media company that publishes newspapers (Dainik Bhaskar, Divya Bhaskar etc.) and runs FM Radio channels.

It’s a little strange that just before the massive election madness, when media companies would earn their most revenue, that promoters would sell their stake, especially when the stock’s off the highs it made recently. And only promoter has sold about 30% of his unpledged stake.

At the same time, HDFC Infrastructure Fund has bought 10 lakh shares for Rs. 295.

Promoter sales are not usually a big deal and sometimes help them get liquidity. But the size of this deal - Rs. 160 cr. - makes one wonder why they’re selling all this much at this time. The stock closed today at Rs. 291, marginally below where the promoters sold.

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The man behind Capital Mind. Deepak is a co-founder at MarketVision, a financial knowledge company. Deepak also provides data research and consulting services, and now lives in Bangalore. Connect with him at deepakshenoy@gmail.com.

2 comments “Promoters Sells Big Chunk of DB Corp Shares”

Hi Deepak

DB corp is going digital in a big way so may require liquidity.

http://daily.bhaskar.com/article/NAT-TOP-dainik-bhaskar-group-launches-online-edition-in-uttar-pradesh-4579724-NOR.html

This may be one of the reasons. It may be planning to go digital in many more states too and hence booking profit when stocks scaling new highs.

What’s your take on this?

Unlikely.

1) DB Corp would have raised funds, not the promoters. I.e. the money for a new investment should be done from DB Corp’s accounts, not from its promoters. No promoter will give the company 150 cr. without getting back stake for it. So if DB corp needs money they will have to do a rights issue or a promoter placement or something. That involves some dilution, and there don’t seem to be any immediate plans to do this anyhow (not mentioned in any board meeting minutes or such).

2) Going online doesn’t need 150 cr. , it is way too high an amount for a publisher to do this.