The sixth edition of the IPL may well have ended on Sunday, but the impact of the spot-fixing allegations was visible on the share of India Cements even on Monday. The Chennai-based company registered its longest losing streak in more than a year, with the share shedding over 23% in the last seven sessions.
India Cements has come under selling pressure ever since news poured in that Gurunath Meiyappan has been arrested in the spot-fixing controversy. Meiyappan is the son-in-law of the company?s managing director and vice-chairman, N Srinivasan, who himself is under a lot of pressure to resign from the post of the president of the Board of Control for Cricket in India (BCCI).
On Monday, share of India Cements lost 1.74% to close at R70.40. This is the lowest closing price for the stock since January 18, 2012. The share lost over 10% on May 22, when it was reported that the Mumbai Crime Branch will summon Meiyappan for questioning. Since then, it has lost about R175 crore in market capitalisation. The stock touched its 52-week-low of R68.4 on May 23.
According to market players, corporate governance issues will continue to haunt the stock in the medium term. ?Investors will shy away from the scrip at least for some time as no one prefers a share with an overhang. However, once the firm starts posting strong numbers, the stock should catch up,? said Vishal Jajoo, senior research analyst, Nirmal Bang Securities.
Experts are of the view that there could be a further erosion in the share price of India Cements as investors are expected to shift capital to other cement manufacturers. ?There would be at least 7% further drop in the price. However, it is difficult to gauge the future of the stock as several variables are involved now. But we don?t expect the share to come out of the woods anytime soon,? said another analyst.
Among the top cement players in terms of market capitalisation, including Ambuja Cements, ACC, Ultratech and Grasim, only India Cements saw its share price fall on Monday. The fall in the price came amid an impressive gain in the benchmark Sensex, which crossed the psychological mark of 20,000.