Investor Nadeem Nisar challenges delisting price of PSMC

February 07, 2024 (MLN): Investor Nadeem Nisar, who holds more than 10% shareholding in Pak Suzuki Motor Company (PSX: PSMC) has formally contested the delisting price of Pak Suzuki Motors shares, challenging its valuation and citing procedural irregularities.

In a letter addressed to the Pakistan Stock Exchange (PSX) and Securities and Exchange Commission of Pakistan (SECP), Nadeem Nisar expressed deep concerns regarding valuation discrepancies and procedural lapses in the delisting process.

He argued that the delisting price of Rs609 per share markedly deviates from the discerned fair market value, as delineated in independent valuation reports, analyst appraisals, and recent market trends.

These assessments range from Rs925 to Rs4,799 per share,inclusive of considerations such as latest quarterly EPS, P/E ratios, and Industry-specific comparative transactions.

Moreover, the fair price, determined by the earnings per share (EPS) of the last three delisted MNCs, stands at approximately Rs12,704 per share. This calculation is based on the average price-to-earnings (PE) ratio of these companies.

However, existing disparities cast significant doubt on valuation methodologies, potentially leading to the undervaluation of shares in Pakistan's market, he said.

Nadeem Nisar raised concerns, saying that the delisting procedure is beset by a constellation of procedural red flags, including oppressive management practices, impeded minority shareholder participation, and the withholding of essential information.

He also pointed to recent positive developments, including a substantial increase in earnings per share and a promising industry outlook, as further evidence of the potential undervaluation of PSMC shares.

Nadeem Nisar pledged to provide supporting evidence from independent analyst reports, including those from Aba Ali Habib Securities (Private) Limited, to substantiate his claims.

He called upon the SECP and the PSX to conduct a thorough investigation into the delisting process, focusing on valuation methodologies, procedural transparency, and regulatory adherence.

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