Hinduja Global Solutions (HGS) shares slumped 20% on Friday after the company hinted it could offer additional loans to developers after granting them a 500 crore rupee loan.
The company had sold its healthcare business to Baring’s private equity fund in August last year for $ 1.2 billion (Rs 8,000 crore) and its shareholders expected a large dividend of the share of society. But its minority shareholders were disappointed after the company said Thursday it was offering just a 150% special dividend to celebrate the deal, causing its share price to drop.
The stock fell to Rs 2,855 per share on Friday, pushing its market valuation to Rs 5,967 crore. The promoters, the billionaire Hinduja family, hold 67.2% of the company’s capital.
“The confidence of minority investors in the promoters is so low that investors think the promoters will swallow up all cash flow except the Rs300 crore dividend from the sale,” said Shriram Subramanian, founder and managing director of the shareholders’ proxy. consulting firm, InGovern. âSebi (Securities and Exchange Board of India) must investigate whether management misdirected investors during conference calls,â he said.
The company’s stock, which is engaged in outsourcing, hit a record high of Rs 3,948 on Tuesday after the company informed the stock exchanges of a board meeting to consider the interim dividend and a proposal to free issue of participating shares.
In the past month, the stock had climbed 24% against a 5% rise in the S&P BSE Sensex until Thursday.
In a disclosure to the stock exchanges on Thursday, the board of directors recommended free shares in the proportion of one share for each share held by shareholders.
The company also announced that its board of directors has approved the proposal to increase the limits on granting loans, making investments and providing guarantees or guarantees of up to 3,500 rupee crores.
The company gave no indication of how it plans to extend the loans, citing a “period of silence” scaring shareholders.