Stock of this company tanked 46% in 1 wk after promoter offloaded 10% stake

Shares of BGR Energy Systems were locked in the 20-per cent lower circuit at Rs 60.95 on the National Stock Exchange (NSE) on Tuesday at 01:35 PM, in an otherwise firm market, extending their decline into fifth day. The slide comes after the promoter reduced its stake in the company via open market.

A combined 15.63 million equity shares, representing 21.65 per cent of total equity of BGR Energy, changed hands on the NSE and BSE. There were pending sell orders for a combined 2.72 million shares, the exchange data shows.

In the past one week, the stock of the civil construction company has tanked 46 per cent from a level of Rs 113.65, after its promoter Sasikala Ragupathy sold 7.4 million equity shares, representing a 10 per cent stake worth of Rs 69 crore in the company, via open market.

The promoter had offloaded these shares between February 21 and February 26 through multiple bulk deals on the NSE, exchange data shows. The name of the buyers was not ascertained immediately. Sasikala held a 23.99 per cent stake in the company as of December 2023.

On Monday, February 26, Sasikala sold 1.8 million shares at an average price of Rs 79.73 through open market transactions, valuing the deal at Rs 14.44 crore. Earlier, on February 21, he offloaded 1.58 million shares at a price of Rs 108.48 per share, followed by 1.6 million shares at Rs 97.37 on February 22, and 2.42 million shares at Rs 89.59 per share on February 23, data shows.

The stock had hit a 52-week high of Rs 119.50 on February 20. Prior to that, in the past seven months, the market price of the company had more than doubled, zooming 103 per cent from level of Rs 58.95.

As per stock exchange disclosure, BGR Energy’s Chief Financial Officer (CFO), P R Easwar Kumar, and Company Secretary, S Krishna Kumar, have resigned from their respective posts due to personal reasons. Both the resignations are effective from closing of business hours on March 30, 2024, the company said.

Meanwhile, for the quarter ended December 2023 (Q3FY24), BGR Energy had posted a consolidated net loss of Rs 691.38 crore due to higher cost of raw materials. The company had posted a loss of Rs 59.22 crore in the year-ago quarter (Q3FY23) and a loss of Rs 107.14 crore in the previous quarter (Q2FY24).

That apart, the company received communication from banks regarding classification of credit exposure of the company as 'Substandard' pursuant to the Reserve Bank of India (RBI) divergence report. The company has credit facility from 12 banks amounting to Rs 3,894 crore. Out of this, eight banks have classified the account as non-performing asset (NPA) amounting to Rs 3,346 crore.

During the quarter, the company also accounted for termination/short closure of certain contracts and revision of project budget which has impacted the turnover.

The promoters have infused funds in the form of unsecured loan. The company is taking efforts for debt restructuring and infusion of strategic investor. The company is also making all efforts of implementing a restructuring plan and therefore the accounts of the company have been prepared on "Going concern basis", BGR Energy said.

Further, pursuant to the orders of the Rajasthan High Court on 21.12.2023, the company received demand notice from the Rajasthan VAT authorities amounting to Rs 508.69 crore (Tax Rs 145.52 crore and Interest Rs 363.17 crore) on 12.01.2024. The company is taking steps to file a SLP with the Supreme court, results note stated. CLICK HERE FOR FULL DETAILS