Amtek Auto crashes 35%; stock down 82% in one month

Amtek Auto told the stock exchanges that is facing "temporary cash flow mismatch"

Shares of auto component maker Amtek Auto plummeted 35 per cent on Thursday, extending its one-month fall to nearly 82 per cent. All other group companies, including Castex Technologies and JMT Auto, too fell by the maximum permissible limit of five per cent, even as the overall market rallied by more than one per cent.

Investors have been dumping their shares in Amtek group companies due to concerns over debt default. Last month, Amtek Auto told the stock exchanges that it is facing “temporary cash flow mismatch”.  On August 7, ratings agency CARE suspended coverage ratings on Amtek Auto’s debt, after the company failed to furnish information required to monitor the ratings.

Shares of Amtek Auto fell Rs 16.85, or 34.81 per cent to Rs 31.55, the lowest close since February 2001. Meanwhile, group companies Castex Technologies and Metalyst Forgings fell by five per cent and extended their one-month fall to over 60 per cent.

“The management of the company remains confident in the company’s abilities to capitalise on opportunities arising out of a stronger recovery in the Indian automobile industry over the quarters to come. The management re-iterates that the long-term fundamentals of the company remain strong. In future, if any activity/event occurs or takes place, which need to be reported to stock exchanges, the same will be intimated within due course of time,” Amtek Auto had said in a BSE filing on August 20.

The company didn’t immediately issue any clarification to the exchanges following Thursday’s stock price crash.

All Amtek group companies had reported weak June quarter results, underscoring the financial stress. Also, a move by the promoter group to infuse Rs 75 crore capital in the company has failed to assuage investor concerns.

The woes at Amtek Auto have hit shareholders and investors at large. The company has over 50 per cent public shareholders. Also, two of JP Morgan Asset Management Company’s debt schemes have investment in the company’s debt paper. The fund house has been forced to restrict investor redemptions in these schemes due to the drop in credit rating of these papers.