Videocon plunges 35% in 2 days on fear of loan default

Mumbai: The shares of Videocon Industries were locked in 20% lower circuit for the second consecutive day over the fear of loan default. The stock plunged 35% in two days to Rs 64.80 on Tuesday from Rs 100.45 on Friday.

Dena Bank had declared the account of Videocon Industries as non-performing asset (NPA) in the fourth quarter ended March 2017. Dena Bank was the first lender to classify Videocon as a bad loan. As on December 2016, the company had a total debt of Rs 47,554 crore as against the current market capitalisation of Rs 2,167 crore.

“Investors should avoid this stock till the debt crises are sorted out,” said VK Sharma, head of business, private client group, HDFC Securities. “Other public and private sector lenders may also follow Dena Bank which may worsen the situation for the company.”

The company blamed the negative publicity following Dena Bank’s classification of the company’s Rs 520-crore loans as NPA.

“We believe that the recent crash on the stock price of the company could be due to the said classification of Videocon’s loan as NPA by Dena Bank,” company said in an exchange filing on Tuesday.

Last year, lenders asked the Dhoots to monetise the Kenstar brand from its consumer electronics division, hive off real estate assets, sell a part of their overseas assets in oil and gas, and get rid of their DTH business. In March last year, Videocon Telecommunications’ entire spectrum holding was sold to Bharti Airtel for Rs 4,428 crore. The company announced the merger of its DTH business with Zee Entertainment’s DTH platform — Dish TV — in November last year.

During the December 2016 quarter, Videocon’s standalone income stood at Rs 2,087 crore while net loss was at Rs. 510 crore.