Crompton Greaves on Wednesday witnessed intense selling owing to an unexpected loss in the third quarter and rejection of an offer for its overseas power business.
Shares of the engineering company plunged 21.7% to Rs 130.80 on the BSE, the biggest single-day fall in 25 years. The slide in the stock eroded Rs 2,275 crore of investors’ wealth.
For the October-December quarter, Crompton Greaves reported a consolidated net loss of R107.03 crore, against Bloomberg consensus estimates of a R48.5-crore profit. It reported a 14% drop in its quarterly turnover to R2,067.8 crore, which also fell short of analysts’ estimates.
Investors also seem to have got concerned over lack of financial disclosures related to Crompton Greave’s consumer business which the company had de-merged in 2014 into Crompton Greaves Consumer Electricals (CGCL).
Ambit capital dropped coverage on the stock as it awaits listing of CGCL. “However, we remain skeptical of CRG’s power business given rising competition from
cost competitive MNC players,” noted Ambit in a research note.
Though the company received a definitive offer for its international power business in Europe, the US and Indonesia, the board decided not to accept it owing to certain conditions attached to the offer. Lack of clarity on its future course of action related to these businesses also weighed on the stock price.
According to Kotak Institutional Equities, “CG did not reveal its future course of action on the sale of the business though our earlier interactions made us believe that the company, given the changed business dynamics, did not want to retain the business,” the domestic brokerage house said.