Promoters To Increase Their Stake In Piramal Life

The promoters of Piramal Life Sciences are increasing their stake in the company as per a recent filing to the stock exchanges. Yesterday the company informed that Sai Krishna Trust (the corporate trustee of Piramal Management Services Private Limited) would acquire a total of 85,88,480 shares from another promoter group entity, PHL Holding Private limited. This represents a total of 33.08 per cent of the total share capital of Piramal Life Sciences. Post this transaction, the total stake of the promoters i.e. Sai Krishna Trust would go up from 21.58 per cent to 54.66 per cent, representing a total of 1,41,90,708 of shares. The aforesaid activity will be carried in two weeks starting from November 27, 2012. These shares will be bought at the market price but not exceed Rs 24.5 per share.

Earlier in the first week of November, PHL Holding acquired 36,00,556 shares representing 13.87 per cent of the total stake in the company from another shareholder, Paramount. PHL Holding totally held 33.08 per cent stake in the company which will be acquired by the Sai Krishna Trust.

Last year Piramal Life Sciences demerged its new chemical entity (NCE) business and transferred it to Piramal Enterprises (earlier Piramal Healthcare). The shareholders of Piramal Life Sciences received one share each of Piramal Enterprises for four shares of Piramal Life Sciences. Immediately after the demerger, the shares of Piramal Life Sciences tanked by over 90 per cent on the bourses but have shown a strong recovery in this calendar year. The share price of Piramal Enterprises has also gained by 27 per cent from this transaction.

Piramal Life Sciences has posted losses as it has negligible revenues coming from its business of herbal products. Piramal Healthcare, on the other hand, has posted strong growth in topline after merging NCE and the acquisition of U.S-based pharmaceutical information business. The company however reported losses in the recent quarter due to the high interest payment and lower forex gains.

The reasons of the share transfer are not known as this could only be simplification of the shareholding pattern. The business does not have much to talk about. The institutional shareholding has also been declined in the company. The gains largely seem speculative as the delivery of shares has declined significantly. We would advise our readers to sell their holding at the CMP in Piramal Life Sciences and exit the counter.