Religare shares wobble on uncertainty 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, which has sought shareholder's approval for the sale of its health insurance business through postal ballot, postponed the board meeting scheduled earlier this week to approve the audited financial results. 

In regulatory filings, it has not assigned any reasons nor has it given the new schedule for the results. It said the meeting was postponed “until further notice.” 

When contacted on Wednesday, the day on which the meeting was originally scheduled, a Religare spokesperson said, “The finalisation and consolidation of the books of accounts have taken more time than anticipated. Hence, the company has taken a decision to postpone the board meeting originally scheduled to take place today.” 

Though the stock has recovered from recent lows of Rs 175 to close at Rs 193 levels on Friday, it has been one of the underperformers in the market, which has been hitting new highs. On Friday, Sensex touched 31,000 levels for the first time, recording two digit growth over the past year while the Religare stock has lost 30 percent since last  May.

The falling prices, in turn, put margin pressure on promoters, who have pledged most of their holdings with lenders.  In early May, promoter entities RHC Finance and RHC Holdings told the exchanges in filings that they have topped up their pledges with additional collaterals of about 575,000 shares against their own and group company borrowings. As of March, some 86.33 per cent of the promoter holdings were pledged. 

Investors are looking forward to the FY17 results as this would reflect the impact of several divestments the company has undertaken throughout 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 board during the fiscal. 

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

Separately, the company has also 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 and pending for approval as on date. The appointed date of this scheme is 1st April 2016,” the spokesperson added.