Volatile market conditions force 17% companies to quote below face value

Written by PK Dey | Mumbai | Updated: Dec 1 2009, 04:41am hrs
As the market turnaround, around 17% of quoted companies are quoting below their face value as on November 20, 2009 as against 20% as on November 20, 2008. Out of 2,861 quoted companies, 488 (17.1%) quoted below face value as on November 20, 2009. But on November 20, 2008, the number was 631 (22.0%).

Among the 488 below face value companies as on November 20, 2009, a few of them are big companies.

Arvind Products, Ashima, Dharamsi Moraraji, East Coast Steel, FGP, GV Films, Govind Rubber, JK Synthetics and Lloyds Steel are the major companies that have their prices below their face value. These, and others , are what market experts say are victims of volatile market conditions.

Kishore P Ostwal, CMD, CNI Research said: Market was absolutely bad condition after global meltdown in 2008. In 2009 Indian market recovered very fast due to inherents strength in the economy as well as pragmatic policies of the Centre. However the rise is restricted to only frontline stocks and A group shares as retail investors still lack confidence in the Indian markets.

Of 631 companies which were quoting below face value on November 20, 2008, 246 companies were quoting above face value on November 20, 2009. Mention may be made of Abhishek Industries (Rs 6.79 as on November 20, 2008 increased to Rs 14.75 on November 20, 2009), Deepak Spinners ( Rs 7.96 to Rs 12.42), Gujarat Sidhee Cement (Rs 6.78 to Rs 16.64), Rathi Steel ( Rs 8.92 to Rs 16.13) and Samtel Color (Rs 5.82 to Rs 19.05).

The net profit of Samtel Color turned out to be positive of Rs 75.08 crore during July-September 09 from a loss figure of Rs 23.68 crore during July-September 08. The sales of the company increased by 30.4% to Rs 310.78 crore during July-September 09.

On the other hand, out of 488 companies which were quoting below face value as on November 20, 2009, fourteen of them quoted above par on November 20, 2008. Significant among them are Ashok Alco-Chem (Rs 10.15 as on November 20, 2008 decreased to Rs 7.44 on November 20, 2009), STI India (Rs 12.45 to Rs 6.55), Ecoboard Inds ( Rs 10.50 to Rs 9.90) and Quintega (Rs 11.36 to Rs 8.53).

These can be explained from their latest quarter profit performance.

The net profit of Ecoboard Industries turned out to be negative of Rs 3.22 crore during July-September 2009 from a positive of Rs 1.64 crore during July-September 2008.

The sales of this company decreased by 28.9% to Rs 12.98 crore during July-September 2009. Similarly the second quarter sales of STI India decreased by 7.8% to Rs 43.95 crore during July-September 2009. And the net loss decreased from Rs 6.91 crore during July-September 2008 to Rs 0.52 crore during July-September 2009.