Amtek Auto’s shares plunged nearly 40% in the last hour of trade following a stock exchange announcement that will exclude the stock from derivatives (F&O) segment after the October expiry.
Concerns over the company’s financial performance and its inability to repay its piling debt also resurfaced, prompting investors to dump the stock.
Automobile analysts estimated the company’s consolidated debt at more than R18,000 crore, twice its equity. Its debt-to-equity ratio is the highest for auto component makers across emerging economies in the Asia Pacific region, Bloomberg data showed.
“Essentially, the company is burdened with truckload of debt and unable to service it. Investors are concerned about its piling debt eating into the top line and profitability, and making it difficult for the company to expand or get more business,” said an analyst with a US-based financial services firm, requesting anonymity due to compliance rules.
Amtek’s scrip lost Rs 39.55 or 30.77% to end at R89 per share. More than 2.4 crore shares exchanged hands on BSE and NSE, 7.23 times the 5-day average daily volume and 9.6 times the three-month average daily volume.
The company’s futures contract for August and September expiry plunged more than 35% with a steep fall in open interest, indicating huge unwinding of long positions. Its market capitalisation shrunk to Rs 1,960.83 crore from 2,832.18 crore Tuesday.
Amtek’s stock has lost nearly 50% in the last two weeks. Wednesday’s decline in Amtek’s stock price also reflected on other subsidiary companies as Metalyst Forgings declined 8.5%, while JMT Auto and Castex Technologies lost 5% each.
Last week, Amtek said its loss widened in the quarter ending June 2015. The Gurgaon, Haryana-based company reported a loss of Rs 236.5 crore in its third quarter compared to a profit of Rs 114.7 crore in the corresponding period last year.
Sales during June 2015 quarter declined 18%, while its financing costs nearly doubled to Rs 157.6 crore.
Earlier this month, FE had reported that Amtek’s subsidiary company Castex Technologies (formerly Amtek India) came under the regulator scanner after its FCCB holders, including a set of FIIs, complained to Sebi and stock exchanges about price manipulation that triggered a clause in the agreement and allow the company to enforce conversion of its $200 million FCCBs.