Shares of Videocon Industries fell for the sixth straight day even as the BSE revised circuit limits for the consumer electronics company. BSE had on Friday changed the circuit limits to 5% from 10%, in order to kerb excessive volatility and to ensure that the stock price does not fluctuate beyond a prescribed level during a session. These new limits are applicable from today, 29 May 2017.
Continuing the trend from last week, today as well the company’s shares were locked in a lower circuit within minutes of commencement of trade as investors continued to dump the stock. Trading in the scrip was halted at 9:15 am with prices falling 4.97% to Rs 44.95.
Shares of Videocon Industries have plunged almost 55.25% since the beginning of last week, amid reports of loan repayment worries for the consumer durables major. This decline has eroded Rs 1,855.6 crore from the company’s market valuation which now stands at Rs 1,503.39 crore. On May 19, the stock price of the company stood at Rs 100.38 and on Friday it stood at Rs 47.30, registering a fall of over 52 percent in five days.
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Earlier, Dena Bank declared loans worth Rs 520 crore given to Videocon as a non-performing asset. Last week, reacting to the stock crash, the company told BSE in a filing, “Dena Bank has recently announced that it has classified Videocon’s loan amounting to Rs 520 crores as a non-performing assets. This has resulted into some negative publicity of the company and, accordingly, impacted its stock price. We believe that the recent crash on the stock price of the company could be due to said classification of Videocon’s loan as NPA by Dena Bank.” The company further added that they are not aware of any other information which could explain the movement in the trading.
According to a report by The Financial Express, the company has losses in the last five consecutive quarters. For the quarter ended December 2016, the company posted a loss of Rs 509 crore against a loss of Rs 84 during the same period in the previous year. The company had a total debt of Rs 47,554 crore as of December 2015. Around 99.26% of the promoter holding in the company is pledged. AK Prabhakar, head of Research at IDBI Capital told The Financial Express that Videocon’s debts are very high and there are serious doubts about the company’s ability to repay their debts. Regarding prospects of the stock Prabhakar said it will better to stay away from the stock and advised the existing shareholders to exit the stock.