This should be due to some promoter activity or some influential investor(s). There are no negative news related to the stock as far as I know. Things are looking positive for this stock overall (new DBT machines to improve the capacity utilization and greater number of value add SKUs for example). Plus the promoters bought shares at 200 last December.
Disc : Invested
thanks for the inputs, i could not find any big negative news either.
ED freezes account of Zenith multi trading that could the reason.
Zenith issue seems to be the only trigger. Its a conversion of warrants. Does anyone know what was the price? Was this warrant part of 270rs or a different one?
Zenith was allotted bonus as well as converted equity shares as per the company release on Feb 28. Converted shares were allotted upon payment to JTL.
Technically JTL would have nothing to do with Zenith’s shares being frozen. But I feel that the street is having concern whether management is involved in any way or not.
Zenith holding seems <1% so not very concerning…but I think management should issue some clarification which would help the street.
Valuation-wise the stock is a buy but this event is an overhang coupled with a bearish market trend.
What I understood… Zenith is offered 27L shares, almost 81cr. They are eligible for a bonus of addl 27L shares. Thats almost 4% of maket cap. Totally about 160cr.
Yes…as I understand , Zenith has 27L existing + 27L bonus+ 27L converted shares. Total 81 L shares which works out to ~6% of the Mcap.
I hope the company issues some clarification.
At what rate the warrants getting allotted to these non promoter entities including zenith ?
Answer:
Edit : “Warrants were allotted to the warrant
holders on 03.03.2023 at an issue price of
Rs. 300/-.”
“Pursuant to this allotment (allotment of
15,23,555 Equity Shares made pursuant to
the conversion of warrants into equity
shares and consequently allotment of
15,23,555 bonus shares on the shares
converted pursuant to conversion), the
paid-up share capital of the Company is
increased to Rs. 34,83,21,660 consisting of
17,41,60,830 Equity Shares of Rs. 2/- each.”
The original allotment notification.
cfe04cad-c89e-4517-bdbe-5ddf9ed77901 (1).pdf (408.6 KB)
It includes many other entities who converter the warrants ipon payment before this date or due to pay 75% of issue price yet to pay.
So the rate at which they got the shares rs.150 at current rates considering the bonus shares. Am I correct?
Is this a good Corp governance practice ?
The document says 300rs so that is okay… but till 4-6% allocated to a single Non Promoter, not a MF house or anything. I sincerely hope that management is not involved in any back dealings… Mgmt has to give clarification.
Promoters hold 54% as of Feb so it doesn’t make sense for them to collude with Zenith…but better that management clarifies
Thank you. But I wonder if this can be trusted.
I can understand the doubt everyone is casting, but am honestly not able to understand what is bad here due to which the stock hit a lower circuit today. An entity has made an investment. Even a supposedly unscrupulous entity has made an investment in a fundamentally good company that is consistently showing progress and the management is walking the talk.
Per the warrants issuance rules, 25% of the money has been upfront at the time of the issuance with the rest 75% of the issuance price to be paid at the time of conversion. The warrants, per my understand needs to be converted into equity within 18 months of the issuance, barring which the 25% of the initial deposit is forfeited.
Now there are two scenarios that can play out:
If the warrants are not converted into equity due to them being frozen or any other reason, then JTL gets to keep the money. No harm caused to JTL.
If the warrants are issued then JTL’s 6% ownership would be with a supposedly unscrupulous entity. Due to a lower ownership, they cannot have a board member and cannot arm twist mgmt into taking less than ideal decisions.
How in either case will it cause a problem to JTL?
How can it cause management to take decisions that can cause problems for minority shareholders?
If I am having an incomplete knowledge or flawed knowledge on warrants, please do let me know.
Excellent article on warrants by Dr. Vijay Malik: Stock Warrants to Promoters: How to Analyse - Dr Vijay Malik
Disc: Invested
The concern here is whether promoters colluded with a company to proposefully inflate the price. That may not have happened and promoters could have been just innocent but that’s Probably the reason for the 20%.fall.
A further point is that the Zenith company was lawfully allowed to invest into Indian entities. If a listed company allots shares to such an entity, who’s fault is it?
As long as there is no collusion nor any attempts to manipulate the share price, it is not the investee to be blamed for accepting funds from such an investor…especially warrants which were issued long back.
Although news on ED actions were already circulating since last week or so.
The point i am trying to make > not all names linked to this ED episode have corrected as much as JTL did. by now its -30%.
I would like to think that JTL is correcting as overall smallcap/midcap is getting corrected due to regulators(SEBI,RBI) are squizing loans for stocks.(this is what my limited understanding says,i’d like to hear specific news on JTL, if any)
Following is list of entities involved at ED episode ED freezes 13 accounts with links to Dubai-based operator Tibrewala
With my limited resource i could find their links with following listed names and we can check if all these names are corrected in multiplier of double digits.
D-invested at JTL ~180, tempted to add more
Management will in any case issue clarifications.
Even in the case of promoters colluding with operators/Auditors for price manipulations or fake PL/BS, All promoters/managements will present themselves holier than thou.
But a bigger question is, could this be trusted.
Stock took a further beating of 10% post management"s clarification.
Lets hope market has factored in the worst case for the stock.
Looking at PL/ BS, and outlook presented bt the company, seems at an attractive price though.
Discl: Tracking
Why cash flow from operations is very less compare to profits
Management say anything about why cash flow from operations is very low ??
Promoters have bought 3 lac shares from open market today on 18th
