Analysts describe it as market reaction to company’s scrapping plans to raise $300 million. Group company GTL Infrastructure slides 43%
The shares of GTL group tanked amidst speculations of heavy selling of the company's pledged shares, a charge which the company has denied. But market experts believe that such kind of aggressive selling happens mainly when the company's pledged shares are sold in the open market.
The GTL share prices have been falling since Friday and today GTL Limited crashed to Rs127.80, a fall of around 62% and group company GTL Infrastructure fell by 43% to Rs16.85 on the Bombay Stock Exchange.
The share price slump was on a sharp surge in trading volumes. The total trading volume from the BSE and the NSE (National Stock Exchange) for GTL Limited rose to 7.33 crore shares today, from around 16 lakh shares on Friday. For GTL Infrastructure, today's trading volumes stood at a huge 16.05 crore shares from a mere 14.72 lakh shares in the previous trading session.
This indicates the possibility that promoters' pledged equity has been sold. For instance, it could be a bank, with whom the company has pledged shares for raising funds, and the financial entity could have sold the shares. Such large trading transactions are very confidential and only the involved parties are aware of the same.
In GTL Limited, the promoters hold 52.71% of the equity capital, out of which the promoters have pledged only 12.85%.
The company denied selling off its pledged shares, or that any shares were sold by Technology Infrastructure, which holds 11% in GTL. Chairman Manoj Tirodkar was quoted in a report as saying, "Promoters' equity that is pledged for the purpose of acquisition of towers or otherwise has not been sold out. I'm categorical about that. As early as Friday we have spoken to them (Technology Infra) and they are a long-term investor, they have committed that they will remain with the company so there is no reason for me to believe that that would have changed from Friday to now."
Meanwhile, the stories in the media suggest that the company has scrapped its plan to raise $300 million. Analysts believe that the stock has sharply reacted to it. "The company's debt plan of around $3 million has been scrapped. This raises doubts on the credibility of the management. Further, the company will face problems in raising funds. The stock has reacted negatively mainly because of this news," an analyst with a broking firm told Moneylife, preferring anonymity.
GTL Ltd issued a clarification to the BSE stating that, "The company would like to confirm that neither promoters nor entities relating to promoters have sold any shares, including the shares that have been pledged."
Similarly, GTL Infrastructure issued a clarification. The company said, "The company has never launched any roadshow for the above said issue. We believe that the present market conditions, policy clarity on the telecom sector and global market sentiments are not favourable for the issue at this stage. We would like to inform you that the company is in a highly capital-intensive business and it will raise funds at appropriate times. We will keep the stock exchanges updated of any developments on this matter. The promoters and promoter group have not pledged any shares."
GLT replied to the e-mail query sent by Moneylife stating that, "We were informed by all our long-term investors including Technology Infrastructure Fund that they have not sold their holding." The company also sent the clarification letter (details mentioned above) sent to the stock exchange by them.
The GTL share prices have been falling since Friday and today GTL Limited crashed to Rs127.80, a fall of around 62% and group company GTL Infrastructure fell by 43% to Rs16.85 on the Bombay Stock Exchange.
The share price slump was on a sharp surge in trading volumes. The total trading volume from the BSE and the NSE (National Stock Exchange) for GTL Limited rose to 7.33 crore shares today, from around 16 lakh shares on Friday. For GTL Infrastructure, today's trading volumes stood at a huge 16.05 crore shares from a mere 14.72 lakh shares in the previous trading session.
This indicates the possibility that promoters' pledged equity has been sold. For instance, it could be a bank, with whom the company has pledged shares for raising funds, and the financial entity could have sold the shares. Such large trading transactions are very confidential and only the involved parties are aware of the same.
In GTL Limited, the promoters hold 52.71% of the equity capital, out of which the promoters have pledged only 12.85%.
The company denied selling off its pledged shares, or that any shares were sold by Technology Infrastructure, which holds 11% in GTL. Chairman Manoj Tirodkar was quoted in a report as saying, "Promoters' equity that is pledged for the purpose of acquisition of towers or otherwise has not been sold out. I'm categorical about that. As early as Friday we have spoken to them (Technology Infra) and they are a long-term investor, they have committed that they will remain with the company so there is no reason for me to believe that that would have changed from Friday to now."
Meanwhile, the stories in the media suggest that the company has scrapped its plan to raise $300 million. Analysts believe that the stock has sharply reacted to it. "The company's debt plan of around $3 million has been scrapped. This raises doubts on the credibility of the management. Further, the company will face problems in raising funds. The stock has reacted negatively mainly because of this news," an analyst with a broking firm told Moneylife, preferring anonymity.
GTL Ltd issued a clarification to the BSE stating that, "The company would like to confirm that neither promoters nor entities relating to promoters have sold any shares, including the shares that have been pledged."
Similarly, GTL Infrastructure issued a clarification. The company said, "The company has never launched any roadshow for the above said issue. We believe that the present market conditions, policy clarity on the telecom sector and global market sentiments are not favourable for the issue at this stage. We would like to inform you that the company is in a highly capital-intensive business and it will raise funds at appropriate times. We will keep the stock exchanges updated of any developments on this matter. The promoters and promoter group have not pledged any shares."
GLT replied to the e-mail query sent by Moneylife stating that, "We were informed by all our long-term investors including Technology Infrastructure Fund that they have not sold their holding." The company also sent the clarification letter (details mentioned above) sent to the stock exchange by them.
