Cipla promoters selling 2.5% stake. Will be looked as negative in short term. Not for me.

Everyone needs money for varied reasons and Cipla promoters are no different. They are selling a small percentage of their holding to fund their requirements.

Key points to note –

  • The promoters own 36.1% of the Company of which they are selling about 2.5% i.e., about 6.9% of their total holding.
  • Estimated amount that will be raised against this stake sale is Rs 1,830 crore. Expected selling price band is Rs 905 – 917/ share as against current price of Rs 955/ share.
  • Selling is through block deals and will happen on February 15, 2022.
  • Kotak is the broker managing the sale.

As normally happens with these kind of news, one can expect Cipla’s share to remain under pressure in the short term. However, given the quantum involved, I expect the impact to reverse quickly.

In general, market perceives promoters selling stake highly negative. However, personally for me if it’s not very regular and quantum is small, it’s fine.

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