Granules India Ltd

(Vilas D'Souza) #743

How does pledge impact the stock price? So long as the interest n principal repayments are ok, pledging shouldn’t impact

(Sarabjeet Singh) #744

@vagator10 : Answer is there in your statement itself. Its safe as long as Interest and Principal are going. Assuming promotors majority income is from Dividend and Salary. Incase of any short term downtrend company doesnt do well for couple of quarters then dividend income could be hit and repayments affected.

Another scenario which happened recently, due to overall downtrend in market itself, share price got hammered and Promotors had to pledge more shares as collateral for the borrowed money. What if promoters didnt had more share, bank would have sold the pledged ones in open mkt severely affecting the stock price.

Operators can take advantage of situation 2 and try hammering the stock so much that Promotor runs out of options and eventually Bank had to sell to safeguard its money.

Excessive Debt in any form is bad !

(Vilas D'Souza) #745

Very well said. The eps growth seems to suggest that the business is earning above the cost of borrowing,( of course we know that they’re capitalizing the interest cost). With the stock price having rebounded, it remains to be seen if pledge goes down or the promoters use the price rise to raise more debt.

(mrai74) #746

Annual Report shows net debt has increased considerably

(Vilas D'Souza) #747

D/E is ~0.8. the ratio per share matters

(Vilas D'Souza) #748

I couldn’t get the debtors ageing in the AR. It’s an area of concern. Can someone share it if u have?