Lancelot D'Cunha, CEO at ITI Wealth management told CNBC-TV18, "Venus Remedies is one of those midcap pharma companies which have been growing at a very good pace. Consequently the share price also has risen significantly over the last couple of months. But like many of the smaller companies you know when they expand very quickly you see a lot of pressure on their balance sheet.”
“Recently CRISIL has downgraded them to default because they have been unable to make some payments on their loans and that has put little bit of stress on their balance sheet. So given that the cycle until this issue is resolved you’re likely to see a little bit more downside because there could be further unwinding and this default can actually create cash flow problems because the company starts to move its working capital towards payment of loans, which is diverting short term uses of funds to longer term repayment and that could put the company into the severe cash flow problems,” he added.
“At this point of time its better to wait till the numbers come out for the next quarter and then you have an idea what the balance sheet and how it is and then you can take a better call. At this point of time it may be worthwhile if one is a short term trader to cash out and just wait out," he said.
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