Shares of Yatharth Hospital & Trauma Care Services Ltd. declined 6% on January 16, following Ambit Capital’s decision to drop coverage on the stock. The brokerage firm had previously rated the stock as a “BUY” with a target price of Rs 760 but expressed concerns over ongoing Income Tax (IT) proceedings against the company.
Key concerns raised by Ambit:
- IT Proceedings:
The Income Tax Department conducted raids on Yatharth Hospital in October 2023. Recently, authorities attached several properties and equity shares in three subsidiaries under Section 281B of the Income Tax Act. - Uncertainty in Financial Impact:
Ambit cited its inability to assess the potential financial impact of the IT proceedings as a reason for dropping coverage, adding to investor apprehensions. - Delayed Disclosure:
The company disclosed the IT-related developments in December 2023, after completing a Rs 700 crore Qualified Institutional Placement (QIP) on December 19, raising concerns about transparency during the fundraising process.
Market reaction:
The stock is trading 6% lower at Rs 458.45, with analysts and investors closely monitoring further developments. Ambit stated that the ongoing proceedings and recent actions by tax authorities have increased uncertainty, making it challenging to provide an accurate outlook on the stock.
