Elder Pharma plunges as lenders offload pledged shares

R. Yegya Narayanan Coimbatore | Updated on March 12, 2018 Published on May 13, 2013


At a time when the pharma stocks are the flavour of the season, shares of Elder Pharmaceutical Ltd (EPL) sank to a fresh 52-week low, down by 10 per cent, on the NSE today.

It was reported last week that Maharashtra-based Ratnakar Bank had sold 1.4 lakh shares for nearly Rs 5 crore. It was not clear then whether this was part of the shares the promoters had pledged. The selling spree continued today also in the exchanges with the stock down to Rs 225, a loss of Rs 25 or 10 per cent, on the NSE in the morning trade. There were only sellers on the NSE with about 3.68 lakh shares being offered for sale with no buy quotes. But the traded volume was low at 20,029 shares about 75 minutes after trading had begun. But there has been a huge erosion in the value of the stock within six months since it hit its 52- week high of Rs 474 on December 5, 2012.

According to the data available with the stock exchanges, EPL promoters' stake in the company as at the end of March 2013 was only 39.99 per cent. While FIIs hold 16.82 per cent, DIIs hold 6.19 per cent and others, including retail investors, hold 37 per cent in the equity of EPL which is Rs 20.53 crore.

The company's financial performance has been reasonably good. In the quarter ended December 31, 2012, EPL's total income was Rs 250.12 crore, net profit Rs 19.66 crore and the EPS was Rs 9.58. But for reasons not clear, the company's board of directors decided to extend the 2012-13 financial year by three months till June 30 instead of March 31, 2013.

EPL said it would prepare its annual accounts for 15 months -from April 1, 2012 to June 30, 2013. The promoters have pledged around 82.14 per cent of their shareholding in the company. In fact, in just a month-April-, the company had sent 7 notifications to the NSE mentioning share pledge by the promoters.

Elder Pharmaceuticals Limited, whose consolidated turnover was more than Rs 1,350 crore in FY 12, announced in early March that it would be establishing a joint venture company with Kose Corporation of Japan. It was mentioned that the Japanese partner would focus on Indian market through the joint venture for manufacturing and selling cosmetics in India.

While Kose will hold 60 per cent stake in the JV, the Indian outfit would hold 40 per cent stake. It was not clear whether the promoter stock pledging in April was in any way related to raising resources to fund the JV with the Japanese company.

Published on May 13, 2013
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