Now Reading: Shalimar Paints stock surge before deal may face Sebi scrutiny
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Shalimar Paints stock surge before deal may face Sebi scrutiny
Shalimar Paints Ltd shares surged 20% on 3 August, nine days before the company announced a Rs 10,440 crore share-swap deal with Hella Infra Market Ltd. Trading volumes on that day hit Rs 34.74 crore, with 4.52 million shares changing hands, nearly 28 times the stock's one-year average daily volume. The National Stock Exchange issued a query to the company the same day.
Shalimar initially told the exchange it was not aware of any material price-sensitive information. Two days later, it revised its stance, saying it was evaluating strategic options including restructuring and fund raising. On 12 August, the board approved the share-swap, under which Hella Infra shareholders would receive over 77% of Shalimar Paints. Lawyers said the Securities and Exchange Board of India is likely to examine the timeline closely.
Indian Opinion Analysis
The unusual volumes before the deal revive old questions about market surveillance. Sebi's insider trading norms require that any unpublished price-sensitive information be kept confidential until official disclosure. A company that first denies having such information and then announces a transformative deal two days later invites a forensic look at who traded and when. The real test will be whether Sebi finds a link between the spike and the Hella Infra stakeholders who will now control the company. Watch for Sebi's next move: it can issue show-cause notices or seek a detailed trading trail. The key date is the extraordinary general meeting for shareholder approval, likely in October.
Source: livemint.com
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