Shares of this pharma stock under the mid-cap category fell up to 6 percent after the company agreed to the proposed divestment of a majority stake in its subsidiary company.
With a market capitalization of Rs 22,267.30 crores, the stocks of Glenmark Pharmaceuticals Limited started their trading session on Friday at Rs 815.95 and currently trade at Rs 789.15. The scrip witnessed an intra-day low of Rs 775 indicating a fall of 6 percent as compared to the previous close of Rs 828.05 apiece.
Such sharp movements in the company’s stock price were observed after a regulatory filing published with the Bombay Stock Exchange (BSE) dated 21st September 2023 announcing a divestment of 75 percent, i.e., a majority stake in its subsidiary company, i.e., Glenmark Life Sciences to “Nirma Limited”.
Nirma Limited, serving customers in India, is engaged in the business of manufacturing as well as distributing commercial as well as industrial cleaning products.
The transaction is decided to take place at a price of Rs 615 per equity share which implies an equity valuation of Rs 75,354 million. Post the transaction, Glenmark Pharma will still continue to hold a 7.84 percent stake in the subsidiary company.
“This deal aligns with Glenmark’s strategic intent of moving up the value chain to become an innovative/brand led organization, with continuous focus on our core therapeutic areas of dermatology, respiratory and oncology. It also presents an opportunity for us to strengthen shareholder value through deleveraging and enhancing our overall return profile.” commented Mr. Glenn Saldanha, Chairman and Managing Director, Glenmark Pharmaceuticals Limited.
During the recent quarters, the company has been able to increase its operating revenues from Rs 3,373.72 crores during Q4FY22-23 to Rs 3,401.6 crores during Q1FY23-24. Moreover, the company’s after-tax profits have seen a transition from losses of Rs 403.14 crores to profits of Rs 173.13 crores during the same time period.
According to the latest shareholding pattern available for the June 2023 quarter, the company’s Promoters hold a 46.65 percent stake, and the Foreign Institutional Investors (FIIs) hold a considerable stake of 25.52 percent in the company.
Founded in 1977, Glenmark Pharmaceuticals Limited is a drug manufacturing company with product categories including formulations, novel molecular entities, and API products.
Written by Amit Madnani
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