SKF plummets on low buyback price

DALAL STREET SPIKES

The share price of SKF India plunged on Thursday following a disappointing floor price announced by its parent company for the buy-back of shares.

The stock was down 11.29 per cent to close at Rs 186.60, with more than 2.57 lakh shares changing hands on the Bombay Stock Exchange (BSE). Dealing room sources said the counter witnessed selling pressure after the parent company fixed Rs 153 as the floor price for the delisting of SKF India shares.

"The floor price announced is way below the around Rs 250 per share price expected by the market. The stock had in fact rallied sharply since the company announced a buyback in mid-February for SKF India. From Rs 166.10 on February 10, the stock jumped up 23 per cent to Rs 204.60 on February 15, 2005, after which it traded in a range.

The buy-back price is 21.56 per cent to its current market price of Rs 186.60. The German parent Aktiebolaget SKF, together with its subsidiaries, holds 53.58 per cent in SKF India.

A floor price is the minimum price at which bids can be put in a reverse book building. Thus, a floor price only gives an indication of the minimum price and it should be not construed as the final price.