Shares of India Cements ended down nearly 4% on Tuesday after the Supreme Court (SC) appointed committee suspended India Cements-owned Chennai Super Kings (CSK) from participating in Indian Premier League (IPL) for two years.
Shares of India Cements saw selling pressure after the ban, with the scrip losing more than 6% intraday, before ending at R90.75, down R3.45. More than 1.57 crore shares exchanged hands on the BSE and NSE on Tuesday, 4.4 times the 30-day average daily volume of 35.65 lakh shares.
Analysts with whom FE spoke to said the two-year suspension will dampen market sentiment and lead to further fall in the stock price. However, the development is expected to have a limited impact on the company’s earnings. CSK contributes about 10-15% of India Cements’ consolidated earnings before income, tax, depreciation, and amortisation (ebitda).
Further, the strong performance of India Cements’ core operations such as the cement and shipping verticals will provide cushion to the loss of revenue as a result of the ban from the IPL. The ban may also dash India Cements’ strategy to demerge the cricketing franchise from parent company into a separate entity and go for an IPO, analysts added.
“The stock will continue to fall in the near-term but the development will have no major impact on earning,” said an analyst with a foreign financial services firm not willing to be quoted due to compliance reasons.
However analysts ruled out possibility of further downgrades in stock recommendations as the stock has declined about 30% from its peak in the last one year.
“The group and its chairman have always been in controversies hence it is nothing new,” said another analysts with a domestic brokerage firm on conditions of anonymity.
Following the ban on CSK, India Cements announced it will move the apex court against the ban imposed by the panel.
The three-member Lodha Committee headed by former Chief Justice of India RM Lodha also suspended Rajasthan Royals, another IPL franchise co-owned by Raj Kundra and Bollywood actress Shilpa Shetty.
The panel found Kundra as well as Gurunath Meiyappan, son-in-law of India Cements’ vice chairman & MD, N Srinivasan, guilty of spot-fixing and has banned them from cricket for life.