Strides Arcolab Gains On Dividend News
DSIJ Intelligence / 23 Sep 2013
The news of huge dividend has kept the stock in focus despite the company selling its major business.
The shares of Strides Arcolab have gained nearly 5% on the news that the company will declare Rs 800 as dividend for its shareholders. The company had sold its injectables business, i.e. Agila Specialities, to the US-based company Mylan in January 2013 for a consideration of US 1.6 billion. The deal had been stuck with the Competition Commission of India, but has been recently cleared.
The sale of the business contributed to more than 60% of its revenues and nearly 75% of the EBITDA. The shares of the company, however, did not fall despite the divestment building expectations of a huge dividend. At 1.6 billion, the investors’ pie in the sold business would be about USD 27 or Rs 1700 per share. The company, however, would not give away the entire dividend as it will have to keep some portion for future acquisitions and expansion, while some part of it would be used towards debt repayment.
We opine that investors holding this stock should not exit the counter at this time.
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