Indian markets saw a huge rise in volatility after the announcement of Budget 2018 which also led to a trigger for much awaited greater correction.
Experts say no one can predict correction, therefore, it is very difficult to catch a top or a bottom. Our markets have been in
Here we have selected few Mid-Cap which became Small-Cap during this recent carnage.
1. Asian Granito: This tile manufacturer has lost close to 70% of its market capitalization. Tile manufacturers have faced a very hard time after the introduction of GST.
Major Reasons for Drawdown: Their margin contracted in recent times as they were not able to pass the increased cost of production to their customers. Some of the peers were trading close to PE of 40 which definitely was way higher than the industry average.
The stock has fallen from 617 to 156 levels in mere 3 quarters which is close to 75% fall in prices. Its investors have lost close to 1300 crores of their wealth.
2.Reliance Capital: It is one of the company from ADAG group which faced heat from investors due to their huge debt on books among group companies.
One has said a sinking ship will take all its passengers who are afloat on it. Due to same fear, most of ADAG group stocks have faced heavy selling across the counter.
Here is some points about Reliance Capital business model
1. Asset management – Mutual Fund Business 51% Stake.
2. Life Insurance – 51% Stake owned rest owned by Nippon
3. General Insurance – 100% Stake Owned Reliance Capital.
4. Housing Finance – 100% Stake Owned.
5. Commercial Finance – 100% Stake Owned
6. Other Non Core Asset and Broking – Non Core expected to be Divested
Major Reasons for Drawdown: Major pain across the counter started in Nov 2017, when RCOM (group companies) failed to pay a coupon on its 2020 dollar notes before the expiry of a grace period.
The stock has fallen from 626 to 260 levels in
3. Jet Airways: Aviation sector is one of those sectors which seems glossy from outside but hardly creates any money for its investors. The business is closely held by government policies, crude prices and huge compliances.
This stock has lost 7500 crores in market capitalization in just 3 quarters and is down close to 80% from its 52 week high.
Major Reasons for Drawdown: As said earlier Aviation sector is the most difficult business to operate and business margins are affected on daily basis due to huge dependency on Crude prices. Major pain is due to an inability to pass the rise in crude price to its passengers, mainly because of cut-throat competition. The company was also in news due to some allegation on promoters for syphoning funds from the company. Recently, the airline also delayed payment of its permanent employees due to lack of funds.
References
- RCom defaults on dollar debt in
test for Insolvency and Bankruptcy Code - Why Tilemakers’ Shares Have Tumbled
- Jet Airways sinks 65% YTD for all right reasons; is it oversold at current levels?