Debt-Ridden infrastructure and capital goods companies faced heavy selling on Thursday amid renewed concerns over their high levels of debt and promoter share pledging.
Adani Power, GMR Infrastructure, Reliance Power, Punj Lloyd and IRB Infrastructure declined 5-7% on the Bombay Stock Exchange on a day when the benchmark 30-share Sensex fell 0.51% or 102.83 points to 19923.78. IVRCL fell 19.8% as investors worried about the impact of the death of a supervisor with the National Highways Authority of India who was appointed to overlook one of its projects. Traders recalled a similar instance with IRB Infrastructure when one of its promoters’ name came up after the murder of a Right to Information activist in November 2012.
Investors have turned cautious after reports of HDIL vice-chairman and MD Sarang Wadhawan selling 50 lakh shares. On the NSE, the HDIL stock crashed 24.57% to R72.60. About 96% of its promoters’ holding remain pledged.
“Most of the vulnerable, high-leverage companies felt the heat of a sell-off as some of these companies have substantial proportions of their promoters’ holding pledged with lenders while their financials are still under strain,” said a trader.
According to Capitaline, promoters of Adani Power, JSW Energy and GMR Infra have pledged 27-31% of their holdings while their latest total debt stand at R38,600 crore, R9,302 crore and R38,729 core, respectively. IRB Infrastructure and Punj Lloyd had debt of R7,369 crore and R4,962 crore, respectively, as of September 2012.
Interestingly, some of these rate-sensitive stocks including Adani Power and JSW Energy have seen buying interest in the last two months, as the Street started pricing in the positive impact of a likely interest rate cut by the central bank in its upcoming monetary policy meet.