Shares of Amtek Group Companies plunge after removal from F&O segment

MUMBAI: Shares of the debt-laden Amtek group companies tanked on Wednesday after flagship Amtek Auto was removed from the F&O segment and Castex Technologies, a group subsidiary , hit the lower circuit for the twenty seventh day continuously .
Amtek Auto shares plunged 40 per cent to a 52-week low of Rs. 77.25, Castex Technologies hit the 5 per cent lower circuit at Rs. 90.95 while other two group companies such as JMT Auto fell 5 per cent to Rs. 117, and Metalyst Forging declined 10 per cent to close Rs. 81.75.

“There is a sharp unwinding of Amtek Auto long position due to its removal from the F&O segment, causing a 40 per cent price correction,“ said Rikesh Parikh, VP-markets strategy and equities, Motilal Oswal Financial Services.

The group with four listed companies has nearly Rs. 25,800 crore debt on its book.

“Amtek Auto has followed an aggressive acquisitions strategy in recent times which resulted in a huge debt on its books,“ said Chokkalingam G, founder & CEO, Equinomics Research & Advisory .

“The company needs 9 per cent margin to service that kind of debt which is not possible in the auto component sector. On the other hand, weakness in domestic and global auto industry deteriorated its balance sheet.“

The compa ny reported a net loss of `158 crore for .the quarter ended June 30, 2016, against a profit of . `86 crore in the same quarter a year ago. Castex Technologies, on the other hand, passed a resolution to convert $200-million foreign currency convertible bonds (FCCBs) into equity , despite stiff opposition from bondholders who moved Sebi and exchanges to probe the sudden price rise in the stock price. Most bondholders could not exit after the conversion in the absence of buyers.