Apollo Hospitals’ Stock Plunges: Here’s What Spooked Investors
India's largest hospital chain's stock fell the most in more than seven years as a rise in shares pledged by the promoters with lenders spooked investors.
Shares of Apollo Hospitals Enterprise Ltd. tumbled as much as 13.3 percent, the most since December 2011, according to Bloomberg data.
“The additional pledged shares were created due to the unwinding of the deal with KKR and Co.,” Suneeta Reddy, managing director of Apollo Hospitals Enterprise Ltd., told BloombergQuint over the phone.
KKR had invested Rs 550 crore in PCR Investments Ltd.—the holding company of Apollo Hospitals—in October 2013. The investment was in the form of debentures that had an option to be converted into equity shares in the Chennai-based hospital chain at the end of five years. Instead, the promoters via borrowings through pledged shares repaid KKR's debentures. The promoters of Apollo Hospitals own 34.4 percent in the company, and they have 74.81 percent of their holding pledged, according to exchange filing. Hence, the company in a conference call said it increased the pledged shares by nearly 5 percent in January due to unwinding of the deal.
To be sure, the promoter's pledge has been rising for the past six quarters, and is higher by 6.95 percentage points during the period, as per the company filings.
Yet, Reddy is confident of being able to bring down the pledged shares by half in the next six months. She said Apollo Hospitals has two assets that can be sold to lower the debt.
“The company has a majority stake in Apollo Munich Health Insurance Company Ltd. which can be liquidated,” the management reiterated in the conference call after the announcement of the third quarter results. While the company did not disclose the other asset that can be liquidated, it assured that the company is not considering taking more pledge.
The hospital chain's top line increased 17 percent in the quarter ended December, while its operating profit rose 21 percent, it said in a separate exchange filing.
Watch the interaction with the management here:
-
Indians Are Travelling, But Not Every Journey Is A Holiday | The Week In Whys
Pilgrims, patients and working women are the real travellers, and the system hasn't quite caught up with them.
-
The Curious Case of Equitas Small Finance Bank And A CEO Who Quit For Stock
PN Vasudevan believes persistent investor concerns over a perceived conflict of interest had become a governance overhang on Equitas Small Finance Bank's stock, even as the lender improved profitability and asset quality.
-
Talking Points This Week: AI Cash Burn, A Tiger Comeback And An India That Still Finds Its Own Path
India is not immune to higher oil or tighter global liquidity, yet its earnings base is broader, its domestic policy levers are still available.
-
Foreign Investors Own Half Of HDFC Bank and ICICI Bank. An LTCG Cut Could Matter Most Here
Foreign portfolio investors have US$115 billion parked in HDFC Bank, ICICI Bank. If the government cuts long-term capital gains tax, Jefferies says returning foreign money could land here first.
-
'Never Seen This Level Of Negativity': Sandeep Tandon Says The Next Rally May Be Closer Than You Think
Veteran investor Sandeep Tandon says foreign selling is easing, large-caps are due a comeback and mid-caps are crowded, while he turns positive on gold, power and pharma this Diwali.
-
Indians Stay With Family, Not In Hotels | The Reason Why
India still lacks enough clean, reliable and affordable hotels for budget-conscious travellers.
-
The Economic Imperative: Analysing The Material Driving Force Behind India-Canada Strategic Reset
This economic complementarity is further reinforced by deep institutional investment ties and talent mobility, which form the bedrock of the bilateral framework.
-
Medicine Pricing: Where Must Profit Stop?
India must confront excessive margins, hidden incentives and regulatory gaps that threaten the integrity of medicine.
-
Why Amazon And Flipkart Are Struggling To Beat Meesho In India's Smaller Cities
With 274 million users and lowest-cost logistics, Meesho is defending its value commerce crown against giants like Amazon and Flipkart.
-
High US Salaries, No Green Card Certainty: The Financial Calculation Facing Indian H-1B Families
The suspension of PERM processing at eight technology employers does not cancel existing H-1B visas. What it does is force a question many Indian families have been avoiding: is the US salary worth tying your career and family plans to one employer?
