By Aditya Raghunath
Investing.com -- Orchid Pharma Ltd (NS: ORCD )’s share price trajectory since it got relisted in November is a classic example of retail investors getting caught with shares that are very difficult to exit.
Orchid Pharma went through the NCLT (National Company Law Tribunal) last year and was acquired by Dhanuka Labs who owned over 98% of the company. The company relisted on the stock exchanges on November 3, 2020 at Rs 18 a share.
The next five months saw the stock zoom up over 14,277% to Rs 2,588.4 on April 1, 2021. Since then, the stock has lost over 69% of its value and is currently trading at Rs 786.05. When the stock falls, it gets locked into a lower circuit of 5%.
NSE data shows that between November 3 and April 5, not a single share of Orchid Pharma was taken in delivery.
On June 24, 2021, Dhanuka Labs announced an offer-for-sale (OFS) for Orchid Pharma shares at Rs 375 a share. The OFS finally went through at Rs 451 a share. Clearly, no one thinks that Orchid shares are worth more than that. The shares will likely fall further according to market experts.
According to Securities and Exchange Board of India rules, promoters need to ensure that at least 10% of a company’s holding is with the public, which means Dhanuka will have to get their holding down to 90%.
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