Losing face value in a gloomy market

A 23 per cent drop in the Sensex in this calendar year, the second biggest in the last decade, has taken a toll on most stocks, especially those with weaker fundamentals.

While 813 of 3,361 stocks on the Bombay Stock Exchange (BSE) are quoting below their face value, 107 others are trading close to their paid-up value, as on December 27. These 813 companies have seen an average value erosion of 61 per cent in their market values.

Of the 813 stocks, while more than half, or 544 stocks, belong to the B group of BSE, 264 are from the T group and the remaining five from the Z group.
 

WEAK GROUND
Company	Price on BSE in Rs

31 Dec,’1027 Dec,’11% chg Prraneta Ind*70.200.75-98.90 Prabhav Ind80.152.71-96.60 Unitech Intl108.409.70-91.10 Coral Hub36.203.59-90.10 Next Mediaworks38.544.00-89.60 Jupiter Bioscience55.109.05-83.60 SAAG RR Infra40.457.24-82.10 GTL Infrastructure42.758.86-79.30 Jaihind Synthetics39.908.63-78.40 Aster Silicates36.298.18-77.50 Face value of Rs 10, *Re 1 face value                           Source: BS Research/BSE 

Kishore Biyani-promoted Future Ventures India, Shriram EPC Group’s Orient Green Power Company, state-owned PTC India Financial Services, Birla Pacific Medspa and Paramount Printpackaging are among the recently listed companies which are now trading below their respective face values.

“Investor interest in large-cap stocks is on a decline and it is tough for new companies to establish themselves in an overall weak market condition. However, these stocks can rise once the market condition improves,” said Sandip Sabharwal, CEO, portfolio management services, Prabhudas Lilladher.

JSW Ispat Steel, Indiabulls Power, GTL Infrastructure, Lloyds Steel Industries, Infomedia18 and Jupiter Bioscience are some prominent scrips quoting below their face values.

Fundamentals weigh
Experts feel the recent correction has led to many mid- and small-cap stocks drop to astonishing levels ,due to lack of investor interest and poor fundamentals. The first to rise during a bull run, such stocks are also the first to fall during a bearish phase, they say.

Rikesh Parikh, vice president (equities), Motilal Oswal Securities Ltd, says, “The markets are not doing well. There is a lack of investor interest in mid- and small-cap stocks. As for the newly listed stocks, they will continue to trade below their book value.”

“The bear market has been quite deep. The market has been punishing on all classes and sectors of stocks. The wealth erosion in mid- and small-cap stocks, in particular, has been more severe. The troublesome fact is the list of concerns is still increasing. So, wealth erosion can continue,” said Jagannadham Thunuguntla, strategist and head of research, SMC Global Securities.