Hinduja Global soars on talk of healthcare arm’s stake sale deal

The deal is likely to value the healthcare vertical of HGS between ₹6,000 and ₹6,500 crore, significantly more than the company’s market capitalization of ₹5,277 crore.

The board of the company will meet June 18 to finalise the earnings and the deal is likely to be announced on that day, said sources. Although HGS has six business verticals, the healthcare and insurance revenue stream contributes nearly 55% of sales.

Shares of Hinduja Global Solutions gained 5.56% to close at ₹2,528 on Friday. While declining to comment on the likely deal, the company spokesperson said: “In view of changing market dynamics and the need to enhance profitability, the HGS board of directors had asked for a review of our existing portfolio of businesses to unlock higher value.”

HGS is the business processing outsourcing (BPO) arm of the Hinduja Group. It had divested its India domestic business in January 2020. In September last year, the company announced plans to restructure its businesses and said the board and management of HGS were conscious of the need to enhance the profitability and value of all business divisions of the company.

“This review could result in changes in HGS’ corporate structure and initiation of mergers, acquisitions and/or divestments where required,” the company said in an exchange filing.

Since September 7, 2020, the HGS stock has climbed more than three times from ₹716 to ₹2,528.

For the nine months ended December, HGS reported 9% on-year growth in revenue to ₹4,025 crore while its net profit jumped 35% to ₹206 crore. Growth has mainly been driven by the healthcare business. Healthcare & Insurance vertical revenue expanded 10% to ₹2,231 crore until December. As of December, HGS had 244 core BPM clients and 704 HRO/Payroll processing clients.