Royal Orchid spurts after acquiring remaining stake in its subsidiary

Royal Orchid Hotels surged 13.68% to Rs 86.30 at 12:25 IST on BSE after the company said that it acquired the remaining 24.9% shares in its subsidiary, Amartara Hospitality Private.

The announcement was made during market hours today, 11 January 2017.

Meanwhile, the BSE Sensex was up 155.27 points, or 0.58%, to 27,054.83.

More than usual volumes were witnessed on the counter. On the BSE, 33,754 shares were traded in the counter so far as against average daily volume of 13,386 shares in the past one quarter. The stock had hit a high of Rs 86.40 and a low of Rs 75.20 so far during the day. The stock had hit a 52-week high of Rs 115.10 on 11 January 2016. The stock had hit a 52-week low of Rs 56.60 on 17 February 2016.

The stock had underperformed the market over the past one month till 10 January 2017, falling 0.33% compared with the Sensex's 0.57% gains. The scrip had, however, outperformed the market in past one quarter, gaining 15.06% as against the Sensex's 4.21% fall.

The small-cap company has equity capital of Rs 27.23 crore. Face value per share is Rs 10.

Upon acquisition of shares from the joint venture partner, Amartara Hospitality Private Limited has become wholly owned subsidiary of Royal Orchid Hotels. The cost of acquisition is Rs 2.5 crore. Earlier, Royal Orchid held 75.1% stake in Amartara Hospitality. The acquisition is a part of settlement agreement between the joint venture partners.

The consideration shall be payable on or before expiry of three years from 6 January 2017 or on or before the expiry of 30 days after the date on which the immovable property of the company is sold, whichever is earlier.

Amartara Hospitality was incorporated in 2009, with an object of running hospitality business. However, it could not commence its hotel operation as on date. The paid up share capital of Amartara Hospitality is Rs 35.50 crore.

Royal Orchid Hotels' net profit rose 33.7% to Rs 2.74 crore on 8.7% decline in net sales to Rs 19.19 crore in Q2 September 2016 over Q2 September 2015.

Royal Orchid Hotels operates business and leisure hotels in popular destinations.

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