No takers even as stock price plunges to 4-year low

Shares of Gitanjali Gems continue to plunge and dipped five per cent on Friday to hit a four-yearof Rs 85.10.

At end of the day’s trading, there were 4.69 lakh shares on BSE that could not find takers. Similarly, on NSE there were no buyers for 1.48 lakh shares.

According to the latest shareholding pattern, Life Insurance Corporation has increased its holding in the company to 4.89 per cent in the June quarter from 4.36 per cent in March.

LIC has been buying into the company since June last year. It acquired 1.95 per cent in the September quarter last year and raised it to 2.93 per cent in December quarter. It was further enhanced to 4.36 per cent in the March quarter.

It is not just LIC, but many other high profile institutional investors are still holding on to their investment in Gitanjali. As of June quarter, major institutional investors in the company include Credit Suisee (Singapore), Macquarie Finance (India), Morgan Stanley Asia (Singapore) PTE and Macquarie Bank.

Bhavya Gandhi, Senior Research Analyst, Phillip Capital, said besides numerous unconfirmed news driving down the stock, the fundamentals have also taken a hit.

“The company is saddled with huge funded and non-funded debt. With the demand for gold jewellery dipping both in domestic and international markets, it will become difficult for the company to manage this debt,” he said.

Steep fall

Gitanjali shares have been on a downward spiral during last few months. It has fallen from the peak of Rs 637 on April 22 to Rs 85 on Friday, but still it could not find a buyer. The stock was most sought-after among its peers during its heydays. It more than doubled from Rs 300 to its peak of Rs 637 between July1, 2012 and April 22, 2013.

The recent Government measures to taper gold demand have hit all the jewellery company stock on the bourse. However, most jewellery stocks have stabilised except for Gitanjali Gems which could not find a buyer in bourse even after falling 86 per cent in the last three months.

The capital market regulator SEBI and the NSE recently barred 26 entities, including Gitanjali Gems's promoter Mehul Choksi from trading.

suresh.iyengar@thehindu.co.in

(This article was published on July 26, 2013)
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