Why are FIIs buying shares of Nandan Denim at 57% premium to the CMP? …

One aspect that has perplexed novice investors like you and me is as to why elite FIIs are aggressively buying warrants of Nandan Denim where the conversion into equity shares is at a price much higher than the prevailing market price.

We saw this phenomenon first when Polus Global Fund, a FII with a stellar track record for finding multibagger stocks, scooped up a chunk of 2.5 million convertible warrants of Nandan Denim where the shares were to be issued at Rs. 200 each even though the then prevailing price was only Rs. 115.

Later, more elite FIIs such as LTS Investment Fund Ltd and LGOF Global Opportunities Ltd have queued up for convertible warrants of Nandan Denim. The FIIs have pumped in Rs. 100 crore to acquire 5 million convertible warrants.

The astonishing aspect is that the conversion price of Rs. 200 per share represents a premium of over 57 per cent to the present stock price of about Rs 127.

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