On Friday, Novartis India closed at Rs 359.50 on the BSE. It had breached the Rs 351-mark, the level at which its Swiss parent Novartis AG had announced an open offer to buy an additional 39 per cent stake. Even before that, the Novartis India stock had spurted 20 per cent during Wednesday’s session, boosted by the parent’s open offer announcement before trading hours.
The weekly trading volume was higher at 265,144 shares, which was a marginal 2.12 per cent of the non-promoters’ holding in the company. Among the non-promoters, the public holds 25.55 per cent and insurance firms 11.95 per cent. Three mutual funds together hold 6.2 per cent, of which Reliance Mutual Fund alone holds 5.02 per cent.
No wonder there was a lukewarm response to the buyback announcement by the Swiss drug maker Novartis AG, which is looking to raise the stake in its Indian unit Novartis India to nearly 90 per cent from the current level of 50.93 per cent through the open offer.
Pharma analysts, however, believe that the current offer price does not capture the true value of the company’s potential. At the offer price of Rs 351, the stock is trading at price-to-earnings multiple (P/E) of 10.72 on its trailing twelve-month earnings.