The list of top wealth destroyers has several big names such as Videocon and Religare.
A dozen BSE-listed stocks with market values in excess of Rs 500 crore have wiped out up to 85 per cent of investor wealth this year, even as the benchmark Sensex rallied over 22 per cent.
The domestic equity market climbed a wall of worries in the form of cash ban, Fed rate hike worries and disruptions associated with GSTrollout to lift the Sensex some 6,500 points during this period. The 30-stock pack traded at 32,300 on Thursday.
The list of top wealth destroyers has several big names such as Videocon IndustriesBSE 4.87 %, Religare EnterprisesBSE -0.82 %, Gallantt IspatBSE -3.26 %, JMT AutoBSE -1.19 % and Lanco InfratechBSE -4.55 %, among others.
But some of the worst cases escaped notice.
Shares of Shilpi Cable TechnologiesBSE 0.15 % had a dream run in the past couple of years. But a sharp correction that set in this year has made investors run for cover.
India Ratings downgraded the long-term issuer rating of the 12-year old firm to default status in May.
“The issuer did not participate in the surveillance exercise, despite continuous requests and follow-ups by the agency. Thus, the rating is based on the best available information and feedback from a banker, indicating liquidity issues with respect to debt repayment not being serviced timely,” the rating agency said.
Kolkata-based Pincon Lifestyle (erstwhile Modi Udyog) has a similar story. A Rs 1 crore investment on the counter on December 26 would have become a mere Rs 14.68 lakh today.
The stock plunged 85.32 per cent over this period, which cut the company’s market capitalisation (m-cap) to Rs 144 crore from Rs 982.50 crore in just seven months. The textile company had reported four-times jump in net sales and profit for FY17.
Private firm Shreyans Logistics was seen steadily raising stake in the company through February-March, when the stock fell from Rs 220 to Rs 100. Several bulk deals were seen on the counter in May.
UshdevBSE 0.26 % International, once a leading trader in ferrous metal and non-ferrous metals, is now a penny stock. It had a m-cap of Rs 662 crore at the end of 2016, but has since lost two-thirds of its market value.
The company failed to fulfil contractual commitments for supplying materials and sales fell 68 per cent to Rs 2,580 crore in FY17. A rise in interest outgo in recent years (from Rs 40 crore in FY10 to Rs 210 crore in FY17) and income-tax demand aggregating Rs 300 crore hurt the counter.
Among the big names that made crorepati bleed, shares of VideoconBSE 4.87 %Industries have crashed 76 per cent this year over debt woes while Religare Enterprises slipped 57 per cent amid a cash crunch. Till less than a year ago, these companies commanded market-caps of Rs 3,450 crore and Rs 4,255 crore, respectively.
Videocon Industries’ debt has been estimated at about Rs 40,000 crore. Many of the lenders, including Dena BankBSE -2.78 % and Punjab National BankBSE -5.98 %, have already declared the company’s loan as non-performing asset.
Religare Enterprises has been in the eye of a storm amid speculation its lenders had sold some of the shares pledged by the promoters in the open market. The company denied the report.
Religare Enterprises is jointly owned by RHC Holding, and Oscar InvestmentsBSE -0.34 %. Rating agency India Ratings has already downgraded RHC Holding’s NCDs to default rating. The company had over Rs 20,000 crore of debt on its books.
Among others, shares of JMT Auto, Nitin FireBSE -1.45 %, PTL EnterprisesBSE -0.47 %, Lanco Infratech and Gallantt Ispat have fallen between 55 per cent and 72 per cent in the past seven months, wiping out significant investor wealth.
Lanco Infratech has amassed Rs 43,000 crore debt on the books. It is among the 12 companies named by RBI for action under the recently-enacted Insolvency and Bankruptcy Code.
BSE benchmark Sensex hit a closing low of 25,807 on December 26, 2016. From that point, the 30-stock pack has risen steadily to trade comfortably above the 32,400 level on Wednesday, August 2, 2017.