Margin call trigger may have led to 40% fall: CEBBCO

After falling 40 percent in the last two sessions, CEBBCO recovered today on clarification from the management that the fundamentals of the company are strong. Speaking to CNBC-TV18, Ajay Gupta, executive director said the stock fall was beyond his understanding.
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Feb 05, 2013, 03.34 PM | Source: CNBC-TV18

Margin call trigger may have led to 40% fall: CEBBCO

After falling 40 percent in the last two sessions, CEBBCO recovered today on clarification from the management that the fundamentals of the company are strong. Speaking to CNBC-TV18, Ajay Gupta, executive director said the stock fall was beyond his understanding.

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Margin call trigger may have led to 40% fall: CEBBCO

After falling 40 percent in the last two sessions, CEBBCO recovered today on clarification from the management that the fundamentals of the company are strong. Speaking to CNBC-TV18, Ajay Gupta, executive director said the stock fall was beyond his understanding.

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I can assure that the promoters have not sold a single share in the open market nor do we have any intentions, we are long term people and do not sell stock in the market

- Ajay Gupta (ED)

After falling 40 percent in the last two sessions, CEBBCO recovered today on clarification from the management that the fundamentals of the company are strong. Speaking to CNBC-TV18, Ajay Gupta, executive director said the stock fall was beyond his understanding. The company, he says, is not facing any corporate governance issues and promoters have not sold any share in the open market.

He says the identity of the seller will be known next week, but in the meantime, the company has not heard of selling by any large institutional investors. "We want to assure investors that fundamentals are strong," he clarifies.

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Gupta believes this is an issue related to margin call trigger as the company's results declared were in-line with market expectations. Gupta says CEBBO conducted conference calls to allay investor fears. "We have spoke to Religare to seek further clarity," he told CNBC-TV18.

According to bulk deal data available with the exchanges, India Max Investment Fund sold 5.286 lakh shares on the NSE at an average price of Rs 48.56 and another 4.19 lakh shares on the BSE at an average price of Rs 48.2. The fund was holding 25.09 lakh shares at the end of December.

Besides India Max Fund, Aditya Birla Finance also sold 3.25 lakh shares at Rs 48.2 a share.

Prasant Desai, who bought 10 lakh shares in October 2012 at about Rs 101 a share, also sold around 7.33 lakh shares at an average price of Rs 48.

Below is an edited transcript of Ajay Gupta's interview on CNBC-TV18

Q: Why has your stock plunged in the last couple of sessions?

A: That is the only thing I am not able to answer, because there is nothing wrong in the company, there is no corporate governance issue, Deloitte continues to be our auditors, we just declared results which are in line with market expectations and because of all this we are just failing to understand. The sense we are getting from the market is that there has been some margin pressures which triggered the fall on late Friday afternoon.

Some people are linking it to the Religare mismatch which happened on Friday and then over the weekend retail investors panicked and from Monday it has been selling. Yesterday, we explained to the entire investor community that there is no problem in the company, our results are in line with what we have been guiding and are much better than last year.

Last year, the whole year profits were at Rs 40 crore and the stock was at about Rs 60-65. This year, in the first three quarters we declared a profit after tax (PAT) of Rs 48 crore and the stock is now at Rs 45-47 which is not logical. It is a blip and an aberration. I am sure it will correct. There is nothing wrong in the company. I just want to assure all the investors that everything is perfect.

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