Market value of Bhushan Steels promoter holdings down by Rs 1,457 crore in 3 days

Written by Jash Kriplani | Mumbai | Updated: Aug 7 2014, 09:59am hrs
Shares belonging to Bhushan Steels promoter and promoter group have lost R1,457 crore of their market value since the steel-makers name cropped up in the Syndicate Bank bribery case on August 2.

The promoter and promoter group hold 16 crore shares, representing 71.29% of the total equity, as on June quarter, according to data available on the exchanges. As Bhushan Steel's share price has fallen by 22% since the bribery case surfaced on August 2, the market value of promoter and promoter group's shares has fallen from R6,376.56 crore to R4,919.08 crore during the same period.

Meanwhile, the market cap of the Odisha-based company has declined from R8,943 crore to R6,899 crore in the period.

On Wednesday, the counter came under further selling pressure amid reports that the CBI had ordered an internal inquiry to examine why it failed to arrest Bhushan Steels vice-chairman Neeraj Singhal. The scrip slipped to a three-year low of R304.60, before it was locked at the lower circuit of 20%, halting further trading activity on the counter.

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YTD, the Bhushan Steel scrip has declined 36.61%, against BSE benchmark Sensexs gains of 21.23%. While the auto-grade steel manufacturer is yet to announce results for Q1FY15, the March and December quarter have been loss-making for the company.

For the year-ended March, 2014, the total debt on the companys balance sheet stands at R31,839 crore, data from Bloomberg show.

Bhushan Steel is operating at an Ebitda (earnings before interest, taxes, depreciation and amortization) margin of 30% despite lack of backward integration, a Mumbai-based analyst with a domestic brokerage said, on condition of anonymity. But the company needs to adopt better processes to share information with investors.

On August 2, the CBI arrested Syndicate Banks chairman SK Jain (now suspended), accusing him of taking R50 lakh for extending the credit limit of Bhushan Steel and Prakash Industries. The shares of Syndicate Bank and Prakash Industries have slid 8.74% and 24.41% since the arrest.