Why Orchid Pharma shares have jumped 7,346% since relisting on exchanges
The Orchid Pharma share prices have surged from 7,346% since their relisting on exchanges on 2 November 2020. The share price of the company, which has been acquired by Dhanuka Laboratories, has moved from Rs 17.15 on 3 November 2020 to Rs 1,277 on 10 March 2021.
Many experts are terming it as repeat of Ruchi Soya, where the public shareholding fell below 1% post-CIRP and due to low float prices of the scrip surged 8,800% in a matter of a few weeks.
Dhanuka Lab currently owns over 98% stake in Orchid Pharma. However, Dhanuka’s stake has been classified as public shareholding.
New Sebi rules require a company emerging out of insolvency proceeding to have at least 5% public shareholding to begin with. These companies would be given 12 months to achieve a public shareholding of 10% from the date their shares are admitted for re-trading on the exchanges and 36 months to reach 25%.
To comply with this rule, new promoters of the company had filed an application with the Sebi to classify its 98% shareholding as public, which according to its recently disclosed shareholding pattern, seems to have been accepted by the regulators.
Orchid Pharma’s share capital was reduced after the resolution of the corporate insolvency resolution process (CIRP) from Rs 88.96 crore consisting of 8.89 crore shares to Rs 40.81 lakh consisting of 4.08 lakh shares.
Later as per the resolution plan, Orchid Pharma issued and allotted 4,00,00,072 equity shares of Rs 10 each in aggregate to Dhanuka Laboratories and Dhanuka Pharmaceuticals Private Limited (DPPL), an SPV of Dhanuka Lab, into which Orchid Pharma will be amalgamated.
Quarterly results
Meanwhile, the company saw its October-December 2020 quarter revenue dropped 20% year-on-year to Rs 102 crore, while losses jump 29% to Rs 45 crore during the quarter. In the nine-month period (April-December) of the current financial year, the company saw its revenue fall 34.5% to Rs 330 crore while losses drop by 6% to Rs 90 crore.
Also Read: Post-Ruchi Soya, Sebi rethinks exemptions given to listed CIRP companies
