Videocon was locked in a lower circuit in early trade again on Friday as investors continued to dump the stock over loan default fears.
Videocon woes continued for the fifth day in a row. The consumer electronics company was locked in a lower circuit in early trade again on Friday as investors continued to dump the stock over loan default fears. In the last 5 sessions so far, the company’s stocks have plunged over 50 per cent. The scrip was trading at 47.30, down 9.99 per cent at 10.47 am. The BSE Sensex was trading 145.42 points up at 30,895.45 during the same time. The company’s market capitalisation stood at Rs 1,581.9 cr.
Dena Bank has declared loan worth Rs 520 crore of Videocon as a non-performing asset. 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 per cent in five days.
Reacting to the stock crash, the company in a BSE filing said, “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 Financial Express report, 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.