Prataap Snacks Shares Erase Gains After Rising On Mahi Madhusudan Kela, Authum Investment Open Offer

Shares of Prataap Snacks Ltd. erased gains after it surged nearly 12% intraday. The stock had risen in early trade after the company announced that Alpana Sanjay Dangi's Authum Investment & Infrastructure Ltd. and Mahi Madhusudan Kela will buy stake in the company.

The open offer seeks to purchase up to 62.98 lakh fully paid-up equity shares, each with a face value of Rs 5, from the company’s public shareholders.

The stake will be sold at a discount of 28.4% to Thursday's close of Rs 1,042.10 per share.

The existing promoters, Peak XV (erstwhile Sequoia India), sold 46.85% stake for Rs 846.5 crore at Rs 746 apiece, at a steep discount to Thursday's close.

Prataap Snacks listed on the stock exchanges in 2017 (seven years ago) at Rs 938 apiece. The acquisition price and open offer price is at a steep discount to the issue price. Shares of the company hit an all time high of Rs 1,458.70 apiece in April 2018.

Prataap Snacks stock rose as much as 12.08% during the day, before erasing gains to trade 1% lower at Rs 1,031.65 apiece, compared to a 0.06% advance in the benchmark Nifty 50 as of 11:15 a.m. 

It has risen 21.79% in the last 12 months and fallen 3.67% year-to-date. Total traded volume so far in the day stood at 25 times its 30-day average. The relative strength index was at 78.63, indicating that the stock was overbought.

Of the two analysts tracking Prataap Snacks, one has a 'buy' rating on the stock, and the other recommends a 'hold', according to Bloomberg data. The average of 12-month analysts' price targets implies a potential upside of 2.2%.