Let’s think pragmatically and please go through my 2 min. read.
-
There will be overhang on the stock price till a payment is made by the Company or the issue is resolved.
-
What does IT Dept. tell us 1000 Cr. Sales + 400 cr. Cash payment +100 cr. Expenses so total problem currently Est. 1500 Cr. Max Tax impact 50% so Rs. 750 Cr.
-
Can be paid with 2 qtr profit (Last yr. Profit Rs. 1600 Cr.). This is subject to Company not contesting and all the legal procedures. All this takes time.
-
If promoters are not arrested and the amount is limited to Rs. 1500 Cr. Then above scenario plays and the company will not go bankrupt.
-
Now the problem is simple – shareholders who are selling particularly FII’s and DII’s. How low can they make the price fall and who will buy when they sell. Surely price will settle at equilibrium.
-
It is our job to find that equilibrium. Why? You are getting India’s largest wire manufacturer intact(Factory’s are not sealed) at a discounted price.
That’s my 2 min read of the situation.
Disc: Invested. I’m not a SEBI RIA. Please consult an RIA before investing.