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Tata Communications surplus land demerger: Key things to know

Updated : September 16, 2019 02:42 PM IST

For so many years, we have been hearing about their land bank and the value that is ascribed to it. There are a few details in terms of demerger, the surplus land will be demerged into an entity—Hemisphere Properties India. If you have one share of Tata Communications that will fetch one share of Hemisphere Properties as well.

September 18th is the record date. So today is the last date effectively if you want to participate in this particular demerger and you want to get shares of the demerged entity.

To give you a few details in terms of land and it has been talked about for so many years, more than Rs 10,000-14,000 crore is what this land has been given in terms of value. The surplus land is nearly around 770 acres odd. It is located in various parts of the country like in Pune, Kolkata, New Delhi as well as Chennai.

In terms of financials, the current stock price is only around Rs 430 odd. The surplus land is valued between Rs 160 and Rs 170 per share. This is after discounting it by nearly around 60 percent. So at around Rs 160-170, you are giving it only 40 percent of its estimated value assuming that the value of the land is approximately Rs 12,000-15,000 crore odd and that’s the broad range that we are looking at.

The key risk though is that real estate prices have fallen. There are not a lot of takers in today’s market but this was a key trigger in the last many years in terms of Tata Communications. So if you want to be part of the demerged entity then, in fact, today is the last day to buy those shares and stripped off this Rs 150-160 odd then you are getting the core business at around Rs 280 going as per today’s market price. The stock is at around Rs 430. So keep an eye on the stock today.
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