Unitech tumbles on huge volume

Unitech lost 37.2% to Rs 8.43 at 14:18 IST on BSE on worries of future debt repayments.

Meanwhile, the BSE Sensex was down 297.39 points, or 1.09%, to 26,890.99

The stock dropped on huge volume. On BSE, so far 7.08 crore shares were traded in the counter, compared with an average volume of 65.38 lakh shares in the past one quarter.

The stock saw intense intraday volatility. The stock tumbled as much as 51.63% to hit a 52-week low of Rs 6.50 in intraday trade today, 3 June 2015. The stock hit a high of Rs 13.58 so far during the day. The stock hit a 52-week high of Rs 38.60 on 10 June 2014.

The mid-cap company has an equity capital of Rs 523.26 crore. Face value per share is Rs 2.

As per reports, the intraday crash in Unitech was following rumours being spread pertaining to company defaulting on repayments which were reportedly denied by Unitech. Unitech's debt has been stable and is at manageable levels and its debt equity ratio is one of the lowest in the industry at sub 0.6, reports indicated. As per reports, Unitech had a total debt of Rs 3800.65 crore as on 31 March 2015.

Reports indicated that future interest rate cut for the next three-four months is not likely and hence debt-heavy stocks may find it difficult to restructure until interest rates come down. The Reserve Bank of India (RBI) announced cut in the benchmark lending rate viz. the repo rate by 25 basis points to 7.25% after a monetary policy review yesterday, 2 June 2015.

The risks to inflation identified in April, still cloud the picture, the RBI said yesterday, 2 June 2015. First, some forecasters, notably the IMD, predict a below-normal southwest monsoon. Second, crude prices have been firming amidst considerable volatility, and geo-political risks are ever present. Third, volatility in the external environment could impact inflation. Therefore, a conservative strategy would be to wait, especially for more certainty on both the monsoon outturn as well as the effects of government responses if it turns out to be weak, it added.

With still weak investment and the need to reduce supply constraints over the medium term to stay on the proposed disinflationary path (to 4% in early 2018), a more appropriate stance is to wait for data that clarify uncertainty, the RBI said in a press release.

On a consolidated basis, Unitech reported net loss of Rs 162.54 crore in Q4 March 2015, higher than net loss of Rs 51.55 crore in Q4 March 2014. Total income fell 1.6% to Rs 1057.89 crore in Q4 March 2015 over Q4 March 2014.

Unitech is one of India's leading real estate player. It has a diversified product mix in real estate comprising of commercial complexes, IT/ITes parks, special economic zones (SEZs), integrated residential developments, schools, hotels, malls, golf courses and amusement parks.

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