Elder Pharma hits upper circuit

Elder Pharma which closed at Rs.340 yesterday, opened today at Rs.350 and went on to hit the 5% upper circuit filter at Rs.357.15, with almost 17,000 pending buy orders on the counter.

The stock hit the roof on news that the company is up on the selling block, scouting around for buyers. It is known that it has mandated consultancy firm Ernst & Young (E&Y) and Nomura Securities to look around for a buyer. They are currently in the process of due diligence and in the next fortnight or so, one would know more details.

It is likely that companies would be interested to buy out part of the company and specific brands but maybe not the entire company. Unofficially, it is valued at Rs.3000 crore. Its premium brand, Shelcal currently enjoys a 30-40% domestic market share and this brand is expected to evince maximum interest.

The company is said to be selling out as its operations are currently impacted due to its consolidated debt of Rs.1300 crore, falling margins and pledged shares, where Ratnaker Bank recently sold 1.5 lakh shares in the open market,.