Why Hinduja Global Solutions shares plunged 20% despite announcing dividend

Market


Shares of Hinduja Global Solutions (HGS) hit lower circuit of 20% on Friday at 2,856.65 apiece, its weakest since December 6, making its worst intraday fall in 14 years after the company announced a special dividend post the sale of its healthcare business, which missed investor expectations, as per analysts.

The company on Thursday declared the third interim dividend of 150 per share for the current financial year FY22. It has fixed 18 January as the record date for the payment of this dividend. 

The HGS board also announced a bonus share issue in the proportion of 1:1. Up to Thursday’s close, the stock had climbed nearly 17% since August, hitting a record high this week after HGS said it would consider a dividend and a bonus issue of shares.

“The company’s share tanked 20% in the morning session as investors were disappointed with a lower than expected dividend. On completed sale of healthcare services of the company, HGS received around 4000 per equity share out of which only 150 per share is declared as interim dividend. Although this disinvestment will make capital available for the company to make investments and grow business in other verticals like Telecom, BFSI and Media etc,” said Mohit Nigam, Head – PMS, Hem Securities.

Hinduja Global Solutions has also completed the sale of its healthcare services business to wholly-owned subsidiaries of Betaine BV, funds affiliated with Baring Private Equity Asia (BPEA), one of the largest private alternative investment firms in Asia. 

The transaction was based on an enterprise value of $1,200 million, subject to closing adjustments, and resulted in inflows of $1,088 million. As part of this disinvestment all client contracts, assets, infrastructure and employees will start working for the new company.

Hinduja Global Solutions is one of the global leaders in consumer engagement, digital CX, and business process management (BPM).

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