29-Nov-2023
2 mins read
Orchid Pharma, a Chennai-based pharmaceutical company, witnessed a notable development in its ownership structure as Dhanuka Laboratories, one of its promoters, divested a portion of its stake through an open market transaction. The repercussions of this sale and subsequent acquisition by UTI Mutual Fund reverberated in the stock market, influencing Orchid Pharma’s share prices.
Promoter Stake Sale
Dhanuka Laboratories, a key promoter of Orchid Pharma, made headlines by selling 13 lakh equity shares, amounting to a 2.56% stake in the company, at an average price of Rs 571.28 per share. This strategic move by the promoter reflects a shift in ownership dynamics and potentially signals a restructuring within the company.
UTI Mutual Fund’s Acquisition
Concurrently, UTI Mutual Fund entered the picture, acquiring 4.45 lakh shares of Orchid Pharma at an average price of Rs 571 per share. This purchase showcases confidence from institutional investors and their interest in participating in the company’s growth prospects.
Market Response
The market immediately responded to these transactions, evident in Orchid Pharma’s stock gaining 2% upon opening on the NSE the day after Dhanuka Laboratories’ stake sale. As of 1:09 pm, the stock was trading at Rs 577.05, reflecting investor sentiment and confidence in the company’s future prospects.
Contextualising the Stake Reduction
This recent sale aligns with the broader context of Dhanuka Group’s acquisition of the financially distressed Orchid Pharma in 2020 as part of an insolvency resolution plan. Over time, the promoter’s stakeholding has gradually reduced, standing at around 72.40% as of September 2023.
Strategic Moves and Mandatory Dilution
In September of the previous year, MK Dhanuka, the Managing Director of Dhanuka Agritech, indicated the intention to reduce the holding in Orchid Pharma. This move was driven by the mandatory requirement to dilute a 15% stake by March 2023. Exploring viable options for stake reduction has been a strategic imperative for the group.
In summary, the recent stake sale by Dhanuka Laboratories and UTI Mutual Fund’s acquisition sparked intrigue in the market regarding Orchid Pharma’s future trajectory. This development not only reflects changes in ownership but also hints at potential strategic realignments within the company. As stakeholders monitor these developments, the pharmaceutical firm’s performance and future decisions will be under the spotlight, shaping its journey in the industry.