United Spirits (USL) stock continued its upward move on Thursday and surged 8 per cent in early trade before correcting to close with a gain of 2.44 per cent at Rs. 1,850.65. The stock had surged to the level of Rs. 1,940 before correcting as the overall market sentiment remained weak.
The stock had, on Monday, sky rocketed 35 per cent after the announcement of the Diageo deal in the week-end.
Monday also witnessed a bulk deal amounting to Rs. 113 crore at the rate of Rs. 1,665 per share.
Now that the stock has surged to over Rs. 1,850, doubts have been raised whether Diageo's open offer to acquire 26 per cent stake from the public at Rs. 1,440 per share will be subscribed at all.
Some analysts say that Diageo may have to increase the offer price if the USL shares continue to remain so high. Several brokerages have sharply increased the valuation of the stock to Rs. 2,100 after the Diageo deal while some others feel that this level can not be sustained.
“I feel that the prices have gone up sharply due to short covering at the USL counter. The current valuation is not sustainable and I think prices will correct in the coming days and I hope that the open offer will go through. But if prices remain high, then Diageo will have to increase the offer price,” said Deven Choksey, Managing Director & CEO, KR Choksey Shares and Securities, a Mumbai based brokerage.
Meanwhile, other UB group stocks moved in the opposite direction.
United Breweries stock plunged 9.92 per cent to close at Rs. 788 on the Bombay Stock Exchange while United Breweries Holdings plunged 5 per cent to close at Rs. 128.40.
Similarly, Kingfisher Airlines also plunged 4.93 per cent to close at Rs. 14.07 as the company failed to make salary payment to employees despite its promise.