Why Indian promoters are no longer rushing to delist
Voluntary delistings peaked at 47 in FY19 before declining to 45 in FY22, 22 in FY23, 24 in FY24, and just 12 in FY25, the lowest in at least a decade, according to a Mint analysis of exchange data.
Since FY21, 272 companies have listed on Indian exchanges, underscoring a broader trend: public markets are attracting more companies than they're losing.
Delisting decisions are typically strategic, unlike initial public offerings (IPOs), which are timed to market cycles. A promoter may choose to delist a company to regain full control, to consolidate ownership after a private equity buyout, or to exit costly compliance obligations, especially in cases where trading volumes are low.
In some cases, companies are forced to delist due to non-compliance, though these are treated as compulsory delistings.
But even voluntary delistings have become harder. First, India's post-pandemic bull run pushed up share prices across the board. Since the delisting floor price is tied to historical trading averages, promoters are now expected to offer a significant premium above already-elevated levels.
'The main reason for promoters to not go ahead with delisting is on account of the bull market valuation," said Anand Lakra, partner at JSA Advocates and Solicitors. 'The expectation from shareholders is to obtain a high premium to the floor price, which is already high in a bull market and is causing the promoters not to embark on the delisting process."
The Nifty 50's 10-year average price-to-earnings ratio was at 22.89x till its September 2024 peak and currently stands at 23.37x.
Delisting in India requires the company's promoter to buy back all public shares. Until recently, this process relied mainly on the reverse book building (RBB) method, in which shareholders name the price at which they're willing to tender shares—often well above the floor or indicative price.
But the RBB system frequently ran into trouble when institutional investors demanded steep premiums, citing hidden value in unlisted assets or real estate.
'The RBB system was often ineffective, especially when large investors quoted very high prices, knowing that the company held valuable assets not reflected in its traded stock price," said Arindam Ghosh, partner at Khaitan & Co. 'As a result, many delisting offers either failed or became too expensive for promoters to accept."
One prominent example was Vedanta Ltd's failed delisting in October 2020. The company's promoters offered ₹87.5 per share to buy out public shareholders, but the bid failed after they didn't receive the minimum required acceptance. Media reports indicated shareholder bids went as high as ₹320 per share, making the offer financially unviable.
To address these concerns, the Securities and Exchange Board of India (Sebi) introduced the adjusted book value (ABV) method in September 2024 to calculate the floor price for delisting. This method factors in unlisted subsidiaries, real estate and other hidden assets—often leading to valuations higher than what the public markets reflect.
'While this ensured a more accurate reflection of the company's true worth, in certain cases it further raised the floor price and made delisting even more financially burdensome for promoters," said Ghosh.
'Instead of simplifying the process, it appears this has led to fewer delisting offers, as promoters now face much higher payout obligations to exit the public markets," he added.
Simultaneously, Sebi also introduced a fixed-price delisting option, alongside the existing reverse book building process. Under this route, promoters can offer to buy back all public shares at a fixed price that is at least 15% higher than the floor price.
'However, in certain cases the adjusted book value method had already pushed the floor price higher, which means more money for the promoter to shed, the new mode has not really picked up," said Ghosh.
The case for staying public
For some companies, delisting was once seen as a way to cut compliance costs and regulatory overhead.
'One of the reasons why companies choose to voluntarily delist is the compliance burden that comes with being publicly listed," said V Prashant Rao, director and head of equity capital markets at Anand Rathi Investment Banking. 'Firms with limited resources often struggle to meet quarterly reporting and other regulatory requirements, making the associated costs difficult to justify."
But this mindset is evolving. Many promoters now see long-term upside in staying listed.
'Companies—both foreign and domestic—are recognizing the long-term value of remaining listed," said Bhavesh Shah, managing director and head of investment banking at Equirus Group. 'India's capital markets are in a sweet spot, flourishing with robust investor participation and strong backing for quality businesses. This is creating a powerful platform for sustained value creation and companies do not mind doing the compliance part to remain listed."
'Delisting now would mean opting out of that journey and denying stakeholders the opportunity to participate in the upside," he added.
A generational shift in promoter mindset may also be playing a role.
'A new generation of promoters has emerged replacing older decision-makers and bringing a fresh perspective that views the capital market as a key opportunity for growth," said Tarun Singh, managing director and founder at Highbrow Securities.
'The Indian economy has stabilized over the past 10-15 years with a lower volatility seen in the markets as before. This, along with a steady inflow of new investors, has created an encouraging environment for companies to remain listed rather than exit the market," he added.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Hindu
10 minutes ago
- The Hindu
Cotton import duty exemption a death warrant to farmers, says Samyukt Kisan Morcha
The Union Textile Ministry said in New Delhi on Tuesday (August 19, 2025) that the decision to exempt all customs duties on the import of raw cotton until September 30 was meant to stabilise domestic cotton prices and support the textile industry. Meanwhile, the Samyukt Kisan Morcha (SKM), an umbrella organisation of several farmers' outfits, alleged that the move signalled a death warrant to cotton farmers. The SKM said it strongly protested the notification to eliminate the import tariff on cotton as it would have a direct impact on the domestic price of cotton. 'Cotton price will definitely fall and farmers will face further distress and indebtedness,' the SKM said, accusing Prime Minister Narendra Modi of duplicity and betrayal, and asking him to explain his earlier statement that farmers were his government's highest priority. In the past 11 years, the SKM said cotton farmers were never given a minimum support price for cotton, as recommended by the M.S. Swaminathan Commission. 'The entire cotton area is the highest peasant suicide prone region of India. The elimination of import duty on cotton will further eliminate the livelihood of lakhs of cotton farmer households,' the SKM said. Meanwhile, the Ministry of Textiles said in a statement that the exemption includes the removal of both the 5% Basic Customs Duty, the 5% Agriculture Infrastructure and Development Cess, and a 10% Social Welfare Surcharge on both, cumulatively resulting in an 11% import duty on cotton. 'The decision, notified by the Central Board of Indirect Taxes and Customs, is expected to lower input costs across the textile value chain encompassing yarn, fabric, garments, and made-ups and provide much needed relief to manufacturers and consumers alike,' the Ministry said, adding that the government aims to enhance the availability of raw cotton in the domestic market, stabilise cotton prices, and thereby reduce inflationary pressure on finished textile products, and support export competitiveness of Indian textile products by lowering production costs. The move will protect small and medium enterprises (SMEs) in the textile sector, which are more vulnerable to price fluctuations, the government said.
&w=3840&q=100)
Business Standard
10 minutes ago
- Business Standard
India, US negotiating agreement to liberalise trade in goods: Minister
India and the US are negotiating a multi-sector bilateral trade agreement and as a part of the negotiations, both sides are discussing liberalisation of trade in goods, including non-sensitive agricultural products, Parliament was informed on Tuesday. The government is engaged with all relevant stakeholders including agriculture, farming experts, to assess the interests and requirements of India's rural economy, farmers and agricultural sector, Minister of State for Commerce and Industry Jitin Prasada said in a written reply to the Lok Sabha. "India and the USA are negotiating a multi-sector Bilateral Trade Agreement (BTA). As a part of negotiations, among other things, both sides are engaged in discussions on liberalization of trade in goods, including non-sensitive agricultural products, with the aim to expand trade and deepen the India-US trade relationship," he said. He added that the government is committed to taking all necessary steps to secure and advance the country's national interest and protect the welfare of our farmers, rural economy and agriculture sector. So far, five rounds of talks have been completed between the two countries on the proposed BTA. The US team has recently postponed their visit for the sixth round of negotiations, which was scheduled from August 25. In a separate reply, he said a reciprocal tariff at the rate of 25 per cent has been imposed on certain goods exported from India to the US starting from August 7. Further, additional duty of 25 per cent with effect from August 27, 2025 has been imposed on certain goods exported from India. "The Government has taken note of tariff imposition by the US," the minister said, adding it is estimated that around USD 48.2 billion of India's merchandise export (based on 2024 trade value) to the US will be subject to the above additional tariffs. He said that the government is committed to secure and advance the country's national interest and protect the welfare of Indian farmers, workers, entrepreneurs, exporters, MSMEs and all sections of industry and take all necessary steps to help mitigate impact on trade including through appropriate export promotion and trade diversification measures. Replying to a separate question, Prasada said India has entered into a Double Taxation Avoidance Agreement with the US that applies to the corporate taxation of Indian companies in the United States. The benefits available in this agreement remain unchanged irrespective of the domestic laws of the US. The US has not implemented the global minimum tax rules so far, and has stated that the commitment made by prior administration on it shall have no effect in America unless they are adopted in its domestic laws. "This is unlikely to affect taxation of Indian companies in the United States. US Corporate tax changes generally apply to entities with US tax liability and are not expected to directly affect exporters that sell from India," the minister said adding the government is engaged with all relevant stakeholders including industry to protect country's economic and commercial interests and to mitigate impact on trade through all appropriate steps including export promotion and trade diversification. In an another reply, the minister said the US has announced countervailing duties (CVD) on export of Melamine, Hexamine, Epoxy Resins, Ceramic Tile, Hard Empty Capsules, Overhead Door Counterbalance Torsion Springs, and High Chrome Cast Iron Grinding Media from India in the period January to July 2025. On April 2, he said, the US announced country specific reciprocal tariffs including on India. "A baseline tariff of 10 per cent on nearly all US imports was imposed w.e.f. April 5, 2025, with country-specific reciprocal tariffs, including on India @26 per cent, which was to be effective from April 9, 2025. However, on India, these reciprocal tariffs were suspended till August 1, 2025. India's export to the US covered by country-specific reciprocal tariffs, as per data for 2024, was USD 48.2 billion," Prasada said. The government, he added, is committed to taking all necessary steps to secure and advance the country's national interest and protect the welfare of our farmers, workers, entrepreneurs, exporters, MSMEs and employment-intensive industries to mitigate the impact on trade, including through appropriate export promotion and trade diversification measures. "Government is engaged with all stakeholders, including exporters and industry, for taking feedback on their assessment of the situation," he said. (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
Economic Times
10 minutes ago
- Economic Times
When half your paycheque becomes the EMI: A Rs 50 lakh package can buy a flat, but can it buy peace of mind?
Synopsis On paper, a Rs 50 lakh annual salary may seem enough for a Rs 1.5 crore flat. In practice, the numbers don't stretch that far. Wealth advisor Alok Tiwari's calculations show that nearly half of the take-home pay would go into monthly instalments, leaving little for daily living costs. Financial guidelines and housing affordability data back his warning. While banks may be willing to lend, the risk of being overextended is real. TIL Creatives Representative AI Image A Rs 1.5 crore home loan at an interest rate of about 8.5% over 20 years means an EMI between Rs 1.2 and Rs 1.3 lakh each month. Alok Tiwari, a wealth advisor, broke down the problem in plain numbers.'EMI for 1.5Cr will be 1.2L pm. A 50L CTC makes 2.75L pm. Deduct rents, school fees, insurance, school bus, petrol, car cost, misc, groceries, utilities, vacation etc. Now from the leftover savings divide with 1.5cr,' Tiwari wrote on concern is clear. A Rs 50 lakh annual package translates to about Rs 2.75 lakh a month in hand. Almost half of that vanishes into the loan repayment, before accounting for the many other unavoidable costs of family such a loan might pass bank scrutiny. The Reserve Bank of India allows lenders to extend loans up to half of a borrower's income. But most advisors, and many banks themselves, caution against stretching beyond 40% of take-home pay for housing this case, 40% of Rs 2.75 lakh works out to roughly Rs 1.1 lakh. The EMI required is closer to Rs 1.29 lakh, already breaching that threshold. That gap signals stress, not comfort. The affordability question is not new. Knight Frank's 2025 report on housing shows that, on average, Indian buyers commit 28% of their income to EMIs. But the picture changes dramatically across cities. In Mumbai, the ratio climbs to 48%, a level already seen as risky. In contrast, Ahmedabad and Kolkata remain more affordable, with EMIs consuming 18% to 23% of commitments inch close to half of what a household earns, it squeezes everything else. School fees, groceries, fuel, insurance, travel, and even small savings start to feel post touched a nerve because it describes a common dilemma. Salaries in many urban sectors have risen, and home loans have become accessible. Yet the real question is not whether a bank will say yes, but whether the borrower can live comfortably afterwards.A Rs 50 lakh salary, under present benchmarks, does not comfortably support a Rs 1.5 crore home. The risk is not just of repaying the bank, but of sacrificing financial flexibility. Buyers may end up house-rich but cash-poor. Disclaimer: This article is based on a user-generated post on social media. has not independently verified the claims made in the post and does not vouch for their accuracy. The views expressed are those of the individual and do not necessarily reflect the views of Reader discretion is advised.
