Amtek Auto shares soar 54% after promoter infusion

Firm has been the subject of adverse news for a month due to high debt and suspension of earlier rating by CARE

Shares of Amtek Auto rose 53.6 per cent on Friday, after its promoters infused Rs 75 crore of equity into the company.

The company has been the subject of adverse news and comment for about a month, in the wake of high debt and rating agency CARE suspending its earlier rating.

 

The stock closed at Rs 46.7 and in intra-day trade, rose up to 75 per cent, moving in a range between Rs 32.2 and Rs 53.2 on the BSE.

The promoters had got 44.37 million shares at Rs 169 apiece by way of preferential allotment. The company management in an interview to a TV channel also said it planned to sell industrial plants and a minority stake in businesses abroad.

In an exchange filing last month, the company had said: “…there is decline in the operational performance of the company due to the current market scenario, which caused a decline in the sales and profit margins. There is a temporary cash flow mismatch and to mitigate the present situation, the promoters have already infused Rs 75 crore and if required will also infuse more funds. The company is also exploring various means of fund raising.”

Debt-laden Amtek Auto had raised fear of default among investors after the CARE Ratings suspension on August 7. The company has debt of about Rs 18,000 crore, while the Amtek group has debt of Rs 26,000 crore.

Shares of Amtek Auto have seen huge volatility since August. Last month, it had crashed 50 per cent in two days. Being in the derivatives segment, the stock has no trading limits (it can move by any amount in either direction). With effect from October 30, the stock will be removed from the futures and options segment, following which the exchanges will impose trading filters on the stock.

The shares were down 86 per cent from their 2015 peak of Rs 187 till Thursday. Despite Friday’s surge, the stock is still down 75 per cent of the peak.

Shares of other Amtek group companies were a mixed bag on Friday. Shares of Castex Technologies (formerly Amtek India) fell five per cent to Rs 38.35. Shares of JMT Auto rose five per cent to Rs 54.4. Shares of Metalyst Forgings rose five per cent to Rs 37.50. All four Amtek group firms are down an average of 85 per cent from their respective 2015 peaks. These group companies have seen erosion of Rs 17,000 crore worth of value.