Eros International hits new low on Moody's downgrade; tanks 50% in 5 days

Moody's Investors Service downgraded the corporate family rating for the company to B2 from B1 and changed the outlook to negative from stable.

Shares of Eros International Media were locked in the lower circuit for fifth straight day, down 10 per cent at Rs 33.25 apiece on the BSE on Wednesday after Moody's Investors Service downgraded the corporate family ratings to B2 from B1. It also changed the outlook to negative from stable.

The stock of the movies & entertainment company was trading at a new low, having slipped 50 per cent in past five trading sessions, after two back-to-back ratings downgrade. Last week, ratings company CARE cut its long-term loan facilities ratings from 'BBB-' to 'D'. In comparison, the benchmark S&P BSE Sensex was down 1 per cent during the same period.

The ratings agency cited delays or likely defaults in serving the debt availed from banks as reasons for the downgrade. “The revision in the ratings assigned to the bank facilities is on account of ongoing delays/default in debt servicing due to slowdown in collection from debtors, leading to cash flow issues in the company,” CARE said in its rating rational.

On Thursday, June 6, the company clarified that CARE's rating downgrade was on account of delay in servicing of bank loans for the month of April 2019 and May 2019, which would be cleared within the next seven working days.

"Baseless allegations have been made against the company in the past and subsequent frivolous lawsuits have been dismissed with prejudice by the US courts. Similar baseless allegations continue to be made by known short sellers without justification. We will continue to defend our interests rigorously at all times," Kishore Lulla, group chairman and CEO of Eros International said.

According to bulk deal data, on June 7, Rajesh V had purchased 5,43,159 shares representing 0.57 per cent of Eros International Media at price of Rs 46.32 per cent on the NSE. The name of the sellers could not be ascertained immediately.

The counter has seen only sellers in past five trading days. Till 10:37 am, a combined 73,444 shares changed hands. There were further pending sell orders for 5.25 million shares representing 5.5 per cent stake of the company on the NSE and BSE.