Stock Update: Disa India Limited

I recently wrote about Disa India here. As discussed during the write up one should not base their investment thesis on something as fragile as a de-listing play. 

There were market rumors that company may use an Offer for sale (OFS) - the new SEBI initiated mechanism allowing promoters to sell stake in a separate window other than regular markets - to pare down the stake to 75% and use the proceeds to fund their upcoming Bangalore center. 

Well it seems the rumor was true. Disa India today formally announced their plans of OFS to pare down their stake to SEBI mandated 75% from the existing 86.487%.

DISA Holding A/S (the "Seller") has submitted to BSE a Notice of Offer for Sale an aggregate of upto 173,483 equity shares of face value of Rs. 10/- each of Disa India Ltd. (the "Company and such equity shares referred to as "Sale Shares") aggregating to 11.487% of the total paid up share capital of the Company as on November 15, 2012 by Promoter through a sale on the separate window provided by the BSE Ltd for this purpose.

The Sale shall take place at the separate window of the BSE Ltd and shall commence on November 20, 2012 at 9.15 a.m. and shall close the same day at 3.30 p.m. Indian Standard Time ("Sale Date").

We had discussed earlier the robust balance sheet and viability of continued growth in the business going ahead. Hence, this sale changes nothing on the business front except that this presents an excellent opportunity to enter the stock at lower price points. 

The stock might see major correction on Monday (19th Nov, 2012) as speculators who had entered for de-listing play earlier would rush to exit. Hence it creates an opportunity for some one with a 3-5 year horizon to enter this stock at much lower prices on Monday or participate in the Offer-for-sale on Tuesday (20th Nov, 2012).