Why this smallcap realty stock is locked in 10% lower circuit today?

The market regulator SEBI intimated about the appointment of a forensic auditor with respect to financial statements of the company for financial years 2020-2I to 2022-23

Shares of TARC were locked in lower circuit of 10 per cent at Rs 189.55 on the BSE in Tuesday’s intra-day trade after the market regulator Securities and Exchange Board of India (SEBI) intimated about the appointment of a forensic auditor with respect to financial statements of the company for financial years 2020-2I to 2022-23.

 

Till 12:47 PM, a combined 4.02 million equity shares, representing 1.4 per cent of the total equity of the realty company, have changed hands on the NSE and BSE. Moreover, there are pending sell orders for a combined 1.7 million shares on both the exchanges. In comparison, the BSE Sensex was down 1.1 per cent at 80,842 around the same time.

 

 

SEBI believes that the disclosure of financial information and business transactions of the company have been dealt with in a manner which may be detrimental to the interest of investors or the securities markets; and/or an intermediary or a person associated with the securities market.

 

TARC, in an exchange filing, said the company wishes to place on record that it shall provide all the necessary information, assistance and cooperation in this regard and shall inform the exchanges of any further developments in the matter. "The company remains committed to maintaining the highest standards of corporate governance, ensuring that all processes are conducted with integrity and transparency," it added.  This matter will be addressed thoroughly and efficiently, with no impact on financial, operational or other strategic objectives. “We are confident that this will not affect our strong growth trajectory or the long-term value we are committed to deliver to our shareholders,” the company said.  “We believe this audit will eventually enhance shareholder trust, as we continue to prioritise transparency, compliance, and accountability in all areas of our business,” the company said.  With today’s fall, the stock price of TARC has corrected 31 per cent from its 52-week high level of Rs 275.50 touched on October 7, 2024. Despite this, thus far in the calendar year, the stock has outperformed the market by gaining 37 per cent, as against the 12 per cent rise in the BSE Sensex.

 

TARC is focused on the development of luxurious residential developments in New Delhi and Gurugram. The company and its subsidiaries, LLP, Partnership firm (together referred to as Group) are engaged in carrying business of construction and development of residential projects, commercial projects, township projects, malls, etc. in the National Capital Region and derive rental income from investment in properties.

 

Backed by a robust portfolio of prime land parcels and strategic financial collaboration across lndian banks and domestic and international financial institutions, TARC is poised to further solidify its position as a leader in the real estate sector, the company said.

 

With a total presales of Rs 1,322 crore in the first half (April to September) of the financial year 2024-25 (H1FY2O25), representing an extraordinary year-on-year growth of 600 per cent, the company said it is well on track to meet its guidance for the fiscal year. The company has launched its announced pipeline across its three projects - TARC lshva, TARC Kailasa and TARC Tripundra -  boasting a gross development value of Rs 7,500 crore-Rs 8,000 crore, the company's management said.

 

TARC’s project TARC Tripundra is on the verge of completion and as per its management, occupation certificate is expected to be received by March 2025. The rating agency Infomerics notes that given the locational advantage and experience of the company to execute the projects in a timely manner, TARC is likely to achieve projected revenue over the life of the project in a timely manner.

 

Infomerics derives comfort as TARC is expected to maintain a strong cash flow coverage ratio through FY25-FY27 for ongoing three projects, as 67 per cent of the saleable area of 17mn sq. feet is already booked as on March 31, 2024. The cash flow coverage ratio is expected to be more than 2x through FY25-FY27, the ratings agency said in its rationale dated December 4, 2024.