Nectar Lifescience - Why Is the Stock Down Despite Selling the Entire Business at Almost 2x the market cap?
What happened?
Nectar Life Science sold its API and methanol biz, which accounts for 99% of the revenue, for 1290 crore, while the market cap is around 450 crore.
Why did not perform well today?
Generally, investors and markets don't like divesting core businesses even at higher valuations. An instance of Par Drugs and Prabhat Dairy says these cases generally don't fetch investors a good deal.
In case of Nectar Life Science—the company, though, agrees to give proceeds to shareholders, but after repaying 600 crore debt, so net-net nothing is coming to shareholders like a jackpot.
Also, the company did not specify their future business plans, making this a potential entity without any business
In Jan-25, the company outlined guidance and growth drivers... now suddenly selling the entire business, raising concerns over management credibility.
The promoter stake reduced by 10% in the last two quarters, further raising concerns
#NectarLifeScience #Redflag #CorporateGovernance