Religare shares wobble on worry over results

Promoter entities report pledge of additional shares in early May

Shares of Religare Enterprises have underperformed in recent weeks, amid uncertainty over its audited financial results.

The financial services company has sought shareholder approval for the sale of its health insurance business, through a postal ballot.

It had postponed a meeting of its board of directors, scheduled for earlier this week, to approve the audited results. In regulatory filings, it has not assigned any reason or given a new schedule for the results. It said the meeting was postponed “till further notice”.

Asked on Wednesday, the day the meeting had been scheduled, a Religare spokesperson said: “Finalisation and consolidation of the books of accounts has taken more time than anticipated. Hence, the company has taken a decision to postpone the board meeting.”

Though the stock recovered from a recent low of ~175 to close at ~193 on Friday, it has been an underperformer in the market, which has been hitting new highs. On Friday, the benchmark Sensex on the BSE had touched 31,000 for the first time, recording a two-digit growth over the past year. While, the Religare stock has lost 30 per cent since last May.

The falling price in turn puts margin pressure on the promoters, which have pledged most of their holdings with lenders. Early this month, promoter entities RHC Finance and RHC Holdings told the exchanges in filings that they’d topped up their pledges with additional collateral of about 575,000 shares against their own and group company borrowings. As of March, 86.33 per cent of the promoter holdings were pledged.

Investors are awaiting the FY17 results, as this would reflect the impact of several divestments the company undertook through the year. It would also give a clearer picture of the performance of the new management, headed by chairman Malvinder Mohan Singh, who returned to the board during the financial year.

Before selling the health insurance business to True North at a valuation of Rs 1,300 crore, the company had exited its interests in asset management, sold interests in overseas firms Northgate Capital and Landmark Partners, and sold its wealth management business to AnandRathi.

Separately, the company has proposed a scheme of arrangement to merge several of its arms, to move to a cleaner and tighter structure. “The proposed scheme of arrangement has been filed with NCLT (National Company Law Tribunal) and is pending for approval as on date. The appointed date of this scheme is April 1, 2016,” the spokesperson added.

The company has proposed a scheme of arrangement to merge several of its arms, to move to a cleaner and tighter structure