On Tuesday, shares of Bharti Infratel have surged as much as 8.9% to an intraday high of Rs 238. The stock has been rallying after the company announced the completion of the merger of Bharti Infratel and Indus Towers to create a mega tower company.
The deal was closed on Thursday and since Friday (20 November) the stock has climbed 26.5% from Rs 188 per share to Rs 238 on 24 November on NSE.
As promoters of the new company, Vodafone Group will hold 28.12% stake in the merged entity while the holding of Bharti Airtel Group will be about 36.7%.
"The Board has allotted 757.8 million equity shares of Rs 10 each to the Vodafone group and 87.51 million equity shares of Rs 10 each to PS Asia Holding Investments (Mauritius) Limited (Providence) aggregating to 28.12 per cent and 3.25 per cent, respectively in the post-issue share capital of the company," Bharti Infratel had said in the filing on 19 November.
About the merger entity, analysts at ICICI Securities said that they see near-term stock supply only from Providence PE, which may monetise its stake as it had earlier opted for part cash-out. It added that while Bharti Airtel and Vodafone Plc had earlier shown interest in selling their stakes; considering their large holdings, the brokerage does not anticipate them to sell in the open market creating a supply glut.
"It could be a structured deal such as forming InvIT (though BHIN management has earlier denied it, but the situation has since evolved), or bringing in a strategic investor," it said.
"We see reduction in stake by Bharti Airtel and Vodafone Plc would make the merged entity more independent, which may drive some rerating in the valuations with reduction in conflict of interest (customer and owner are same as of now)," the brokerage firm said.
As for the stock, ICICI Securities in its report said that Bharti Infratel is one of the highest dividend-paying stock with a dividend yield of 5.6% currently.
The report further observes that high dividend yield stocks have performed better in a falling real interest rate environment.
"High dividend yield stocks appear attractive as their yields are now comparable to other fixed-income instruments while having the added advantage of 'inflation hedge' characteristics of stocks as an asset class," ICICI Securities said.