Castex falls, hits lower circuit for 43rd straight session, on allegations of stock manipulation

NEW DELHI: Amtek group stocks took a beating, yet again. Amtek Auto plunged nearly 9 per cent, while group stock Castex Technologies (erstwhile Amtek India) hit its daily lower circuit limit in trade on Thursday amid reports the market watchdog SEBI is probing alledged share price manipulation in Castex Technologies through forced conversion of foreign bonds.

Sources told PTI that Sebi is seriously looking into the matter, following allegations by some bondholders that efforts are being made to manipulate the share price of Castex Technologies by forcibly asking investors to convert their bonds into equity shares.

On July 31, Castex Technologies had informed the BSE that its board of directors has decided to mandatorily convert all the outstanding bonds of $80.80 million out of foreign currency convertible bond (FCCB) issue of $130 million.

Following the fresh development, Castex Technologies hit its lower circuit of 5 per cent at Rs 40.35 as soon as the opening bell rang.

This was the 43rd straight session when the stock hit its lower circuit limit of 5 per cent.

Amtek Auto declined 8.87 per cent to hit its day’s low of Rs 27.75. The stock was down over 10 per cent in pre-open trade.

A rub-off effect was observed on other group stocks JMT Auto and Metalysts Forgings, which hit their lower circuit limits of 5 per cent each.

Amtek Auto has been in news ever since the stock nosedived 30% on August 19. The stock has been excluded from the F&O segment. The company has acknowledged that there is a temporary cash flow mismatch.

The stock has lost nearly 82 per cent of its market value in the past one month.

Last month, JP Morgan Mutual Fund, which has exposure to Amtek Auto, restricted redemptions from two of its debt schemes — Short Term Income Fund and India Treasury Fund.

The new development may add further pressure on the group stocks.