SKF India Ltd – Delisting – Case Study

Part 2

For the purposes of this part, please consider today is 10th March,2005.

Why? On 10th March, 2005, the price touches 230-250, and you think about reevaluation this special situation.As special situations the profits are limited, they are rarely limitless you ought to reevaluate them as the price rises too high or falls too much, to see the new odds of further increase. It is roughly an increase 20% in 25-30 days since our position on 17th Feb, 2005.

Source: in.tradingview.com

Reevaluation:

MNC Acting: Due to rise in price, the odds of further increase in price have fallen. But this is not a normal delisting situation case, MNC involvement ensures that there is not significant derailment in odds of further increase in price, as compared to other delisting situations.

They may be comfortable to pay beyond this price.

Price to Earning:The price to earning too has risen from 10-12 to 18-20. Though this does not significantly impact our risk. It is still not in the very very danger zone.

Since this is a rare case where an MNC is involved, Two decisions can be taken:

  1. Either stake can be slightly reduced
  2. Or kept the same as before

Selling completely, at this point we think is not the right thing, considering the high odds. If you think differently, please share with us.

Part 3…….

(If you want to know what happened next please click on Part 3 on the bottom of the page.)

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