hares of the iconic Mumbai-based electric equipment maker Crompton Greaves Ltd lost as much as 28 per cent during intra-day trades on Wednesday.
The dip came barely a day after the company reported a loss for the third quarter of the current financial year.
The company’s roots go back to the pre-Independence era, and it eventually became a household name in India.
On BSE, the shares fell 28.14 per cent during the day to touch a 52-week low of Rs.119.55. The shares settled the day at Rs.130.80, down 21.72 per cent from the previous day’s close of Rs.167.10.
Crompton Greaves is part of the $4-billion Avantha Group having business interests in sectors such as paper, food processing, chemicals, energy, infrastructure along with power generation, transmission and distribution equipment. Ballarpur Industries, a public listed company and also the country’s largest manufacturer of writing and printing paper, belongs to the group.
On Tuesday, the company reported a consolidated net loss of Rs 107.03 crore for the quarter ended December 31, 2015. The corresponding quarter of the previous financial year saw the company reporting a net profit of Rs 274.29 crore.
The company, however, stated that the financial results of the discontinued consumer products business had been excluded from the consolidated numbers.
The consumer products business was demerged in November and was being carried out under the name of Crompton Greaves Consumer Ltd, which is yet to be listed on the stock exchanges.
The loss triggered concerns among both investors and analysts, with widespread selling amidst downgrading of the stock. According to Bloomberg data, a total of 13 analysts have a buy rating on the company, while 10 have a hold rating with nine recommending a sell.
In the past two days, at least two brokerages – Motilal Oswal Financial Services and Batlivala & Karani — have changed their rating on the stock while another two suspended the coverage of the company citing weak fundamentals.
Ambit Capital, while dropping coverage on the company, said it would re-initiate coverage separately on Crompton Greaves and Crompton Greaves Consumer Ltd once the latter was listed, which is expected by March.
“… We remain sceptical of Crompton Greaves’ power business given rising competition from cost competitive MNC players. On the consumer business, we remain sceptical of sustenance of margins given our channel checks, which suggest aggressive promotions being offered to distributors to push sales,” said a report by Ambit Capital on Wednesday.
The sudden and whopping loss in share price will hurt mutual fund investors as well, with fund houses holding a 23.92 per cent stake.
According to shareholding data available on BSE, HDFC Mutual Fund, DSP BlackRock Mutual Fund, Reliance Mutual Fund and Birla Sun Life Mutual Fund are among the larger stakeholders in the company.
The company’s roots go back to 1878 in England where Colonel REB Crompton founded the business under the name of REB Crompton & Co to make electrical equipment.
Thereafter, REB Crompton & Co merged with F&A Parkinson Ltd to establish Crompton Parkinson Ltd. In 1937, the company established its wholly owned Indian subsidiary under the name Crompton Parkinson Works Ltd in Mumbai along with a sales organisation named Greaves Cotton & Crompton Parkinson Ltd.
When India became independent in 1947, the company was acquired by Lala Karamchand Thapar, who formed the Thapar Group. In 1966, both the entities were merged to create Crompton Greaves Ltd.
Mutual fund investors may also take a hit, with fund houses holding a 23.92% stake
