Shares of Timken India saw a drop on Monday, closing 4.46% lower at Rs 3952.80 on the BSE, a decline from the previous close of Rs 4137.20. This movement in the stock price coincides with news that the company’s parent entity, Timken Singapore, is planning to offload a 6.6% stake in Timken India through a block deal.
The value of this potential stake sale is pegged at Rs 1775 crore, with the floor price set at Rs 3550 per share, which marks a 10.2% discount to Monday’s closing price.
The announcement has evidently impacted investor sentiment, causing a noticeable reaction in the market. The trading volume was high, with a total of 9249 lakh shares changing hands, resulting in a turnover of Rs 3.72 crore on the BSE.
On the NSE, the stock fell 4.60% to Rs 3950 from the previous close of Rs 4140.25, with 2.61 lakh shares traded amounting to a turnover of Rs 104.67 crore. Consequently, the market cap of Timken India declined to Rs 29,711 crore on the NSE and Rs 29,732 crore on the BSE.
Despite the recent dip, Timken India shares have shown a strong performance over the past year. The stock has gained 25.88% in the last 12 months and has risen 22.45% since the beginning of this year.
Over the past three months alone, the stock has surged by 46%, demonstrating significant upward momentum. However, in the short term, the stock is trading lower than its 5-day and 10-day moving averages but remains above its 20-day, 50-day, 100-day, and 200-day moving averages.
At the end of the March 2024 quarter, Timken Singapore held a 57.70% stake in Timken India, equivalent to 4.33 crore shares. The planned sale of a 6.6% stake includes a 180-day lockup period, meaning that Timken Singapore cannot sell additional shares during this time. This lockup period is likely intended to provide some stability to the stock price following the sale.
Timken India Limited is a key player in the manufacture of bearings, gears, gearing, and driving elements. The company operates primarily in the bearings and allied goods and services segment, catering to the automotive sector and the railway industry. Its product lineup includes anti-friction bearings, mainly tapered roller bearings, other roller bearings, components, accessories, and mechanical power transmission products, serving a diverse customer base.
The company’s strong market position and diverse product offerings have underpinned its robust performance in the stock market over the past year. However, the news of the stake sale has introduced a degree of uncertainty among investors, leading to the recent decline in share price. The discount at which the stake sale is priced further adds to this uncertainty, as it may indicate a potential overvaluation of the stock at current levels.
While Timken India has demonstrated strong performance and growth, the planned stake sale by Timken Singapore has created short-term headwinds for the stock. Investors will be closely monitoring the situation to gauge the impact of this development on the company’s future performance.
As always, the market will be looking for any further updates or clarifications from the company or its parent entity regarding the stake sale and its implications for Timken India’s strategic direction and shareholder value.
The information provided in this article is for informational purposes only and should not be considered as financial or investment advice. Always conduct your own research and consult with a qualified financial advisor before making any investment decisions. The author and publisher are not responsible for any financial losses or damages incurred based on the information provided in this article.
