Investors running after another casino stock? Red flags go up on Videocon

NEW DELHI: Punters are speculating over the resolution plan of debt-ridden company Videocon, which is likely to be acquired by Vedanta Group's Twin Star Technologies. However, market watchers are warning investors to keep off such speculative bets.

Deepak Shenoy, Founder, Capital Mind, has advised investors to stay away from Videocon shares as the resolution plan envisages delisting of the scrip, which means the stock value will ultimately become zero.



Shares of Videocon Industries hit upper circuit limit of 5 per cent on Tuesday at Rs 7.80. The stock has risen some 350 per cent in the last one year and 70 per cent in just a month.

The Mumbai bench of National Company Law Tribunal (NCLT) has approved the resolution plan of Twin Star Technology, even when it expressed surprise over the value accepted by the creditor's committee.

The consolidated resolution amount for the 13 companies stands at Rs 2,962 crore against the total admitted claims of Rs 64,938 crore. That comes to 4.89% recovery for secured financial creditors.

"As per the resolution plan, equity shares of the company are proposed to be delisted. Accordingly, the appropriate disclosures in terms of Regulation 3(3) of the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009, shall also be submitted upon receipt of the copy of the Approval Order by the NCLT approving the resolution plan," the regulatory filing of the company said.

BSE and NSE have suspended the trading in shares of DHFL, which has been acquired by the Piramal Group, as its equity shares were be delisted from the bourses.

Market watchers have cautioned investors against such risky and speculative bets.

G Chokkalingam, Founder and CEO, Equinomics Research and Advisory, said these are purely 'Casino stocks'. "If you like to gamble, without any fundamentals, only then bet on them. They are suffering from balance sheet crisis, which ultimately lands them at NCLT."