Som Distilleries Share Price Declines as QIP Plans Put on Hold

Som Distilleries Share Price Declines as QIP Plans Put on Hold

VoM News Desk | October 9, 2023 | 12:10 PM IST | Breaking News | Follow on Google News

Som Distilleries Share Price Declines as QIP Plans Put on Hold

Som Distilleries Share Price Declines as QIP Plans Put on Hold

In a recent development on Monday, October 9, Som Distilleries witnessed a significant drop of over 5 percent in its share price during early trading on the BSE. This decline followed the company’s announcement that it had decided not to proceed with the proposed QIP (qualified institutional placement) issue. The decision was attributed to the lower-than-expected interest from potential investors in the proposed issue. The company stated that it would reevaluate the possibility of fundraising at a more opportune time.

Market Reaction and Share Price Performance

At the opening bell, Som Distilleries’ share price started at ₹368, slightly down from the previous day’s closing price of ₹369.10. Subsequently, the stock experienced a significant decline of 5.5 percent, reaching a day’s low of ₹348.85 on the BSE during Monday’s trading session.

Som Distilleries explained its decision in a statement, saying, “The company is not going ahead with the proposed QIP issue due to a lesser amount of bids received towards its proposed QIP Issue. The company shall evaluate the viability of a fundraiser at a suitable time.” The company also reassured its commitment to growth and delivering value to its shareholders in the short and medium term.

As a consequence of this development, the meeting of the ‘Fund Raising Committee,’ originally scheduled for October 10, 2023, has been canceled. The company had initially planned to raise funds through the QIP route, with a floor price set at ₹349.24 per share. In a meeting held on September 5, the company’s board of directors had approved fundraising of up to ₹350 crore through public or private offerings or the QIP route.

Som Distilleries’ stock had experienced a 3.26 percent decline on the BSE in the previous trading session following the announcement of its QIP launch. Over the past year, the stock had shown significant growth, surging by 188 percent on the BSE, outperforming the equity benchmark Sensex, which had gained a little over 13 percent.

Positive Prospects for Som Distilleries

Despite the recent setback, Som Distilleries and Breweries continue to have promising prospects in the market. The company has demonstrated strong operating performance in recent quarters and is actively pursuing market expansion in the growing liquor industry. In Q1FY24, the company exceeded expectations across various metrics.

HDFC Securities Retail Research expressed optimism about the company’s future and revised its estimates for FY24 and FY25 upwards. The brokerage firm noted that while higher taxes might impact profit estimates, it believed the base case fair value of the stock to be ₹357, with a bull case fair value of ₹385. Investors were advised to consider buying the stock in the ₹320-328 range and adding more on dips in the ₹285-291 range over the next 2-3 quarters.

VoM News Desk

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