IndiGo Block Deal: Rakesh Gangwal and Promoters to Offload Stake Worth Rs 7,028 Crore

InterGlobe Aviation Ltd.’s promoters, including co-founder Rakesh Gangwal, are likely to offload stake worth Rs 7,027.7 crore in a block deal, according to the term sheet accessed by NDTV Profit.

The offer price for the issue has been set at Rs 5,808 per share, indicating a 4% discount to the previous closing price of Rs 6,050 apiece. Co-founder Rakesh Gangwal and the Chinkerpoo Family Trust will together offload up to 1.21 crore shares, representing 3.1% stake in the company that operates flights under the name IndiGo.

Block Deal Details

Multinational investment banks Goldman Sachs, JPMorgan, and Morgan Stanley are the managers of the deal. The block deal is expected to be completed soon, with the exact timeline not disclosed.

As of June, the promoters together owned 7.8% stake in the company. While Gangwal owned 4.73% stake, Chinkerpoo Family Trust, with Shobha Gangwal and JP Morgan Trust Company of Delaware as the trustee, held 3.08% stake in the company.

Rakesh Gangwal’s Stake Sale

Gangwal and the promoter entity offloaded up to a 3.4% stake in May. Rakesh Gangwal resigned from the board of directors of InterGlobe Aviation in February 2022 and had said he would gradually reduce his equity stake over the next five years.

Since then, he has mopped up Rs 45,300 crore from stake sale. The residual stake — 4.78% — of Gangwal Group is valued at Rs 11,169 crore.

Stock Performance

The business update was shared after market hours. The stock settled 1.08% lower at Rs 6,050 apiece on the NSE, compared to a 1.02% decline in the benchmark Nifty 50. IndiGo’s shares have risen 28.19% in the last 12 months and 32.84% year-to-date.

Out of the 25 analysts tracking the company, 20 maintain a ‘buy’ rating, three recommend a ‘hold’, and two suggest ‘sell’, according to Bloomberg data. The average of 12-month consensus price target of Rs 6,349.83 implies a potential upside of 5%.

Impact on Indian Stock Market

The block deal is expected to have a minimal impact on the Indian stock market, as the stake sale is a planned reduction by the promoters. However, the deal may lead to some short-term volatility in the stock price.

Investors should keep a close eye on the stock’s performance and any further developments in the company. It is also essential to consider the overall market trends and the aviation sector’s performance before making any investment decisions.

Conclusion

In conclusion, the IndiGo block deal is a significant development in the Indian stock market, with the promoters offloading stake worth Rs 7,028 crore. While the deal may lead to some short-term volatility, it is essential to consider the company’s fundamentals and the overall market trends before making any investment decisions.

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