Unitech’s board has approved a demerger of its non-core businesses – Transmission towers (100%), Amusement Park (50%), UCP (40%), Uninor Wireless (32.5%) – to a separate entity called Unitech Infra, at a swap ratio of 1:1, which would be listed separately by year end.
Unitech would hold 35% in the same, promoters would hold 32% and the balance would be held by the public. Intention is primarily to unlock further value, make these businesses self funded and renew focus on core real estate business.
Citigroup in a report said,
With the stock having run up 12% over the past 15 days since initial announcement (10% in last one week) and not much NAV upside, we believe large part of the demerger is already priced in. Also, with stock trading at ~3% disc to our NAV of Rs88 (vs. target 25% disc), current
valuations leave little margin of error. Further, underperformance risks remain with likely attractive pricing of new IPOs (given tightening liquidity) offering a lot more choices.
