Gayatri Projects plunges 28% in two days on invocation of pledged shares

On November 15, the rating agency CARE revised the ratings of long-term and short-term bank facilities of Gayatri Projects to 'CARE D', due to delay in servicing debt obligations.

Shares of Gayatri Projects hit an over four-year low of Rs 62.5, and were locked in the lower circuit band of 10 per cent on the BSE on Friday, after the lenders to the company invoked pledged shares.

The stock of construction & engineering company tanked 28 per cent in past two trading days, and was trading at its lowest level since July 2015. Till 10:27 am, a combined 577,855 shares have changed hands, with pending sell orders for 120,003 shares on the NSE and BSE.

The lenders invoked 50,397 pledged shares of the promoters on November 18, data rpfovided by the company show. Earlier, on November 11, the lenders had invoked 55,206 pledge shares. CLICK HERE FOR DETAILS

Last week, the rating agency Credit Analysis & Research (CARE) had revised the ratings of long-term and short-term bank facilities of Gayatri Projects to 'CARE D', due to delay in servicing debt obligations. The instruments with this rating, the agency said, are in default or are expected to be in default soon. 

“The revision in the ratings assigned to the bank facilities of Gayatri Projects is on account of stretched liquidity position of the company due to delays in receipt of receivables leading to cash flow mismatch resulting in delays in debt servicing,” CARE Ratings said in a press release.

Gayatri Projects, however, clarified that the company was in line with its stated strategy and was pursuing monetisation of its stake in Sembcorp Energy India (SEIL). 

"The stake sale was being undertaken to improve company's liquidity position; however, despite its best efforts, the Company was not able to fast track the same and as a result there was a delay in Company's debt service obligations,” it said on the downgrade.

It further added that the SEIL stake sale has now progressed significantly and the Company expects to close the said deal before the end of the current calendar year. Post the completion of the SEIL deal, GPL will be able to significantly de-leverage its balance sheet and overcome its temporary liquidity crunch.

Thus far in the month of November, the market value of the company has more-than-halved from the level of Rs 131 on the BSE. In comparison, the S&P BSE Sensex was up 1 per cent during the period.