Mumbai: Apple Finance Ltd, a penny stock listed on the Bombay Stock Exchange (BSE), has hit the 5% upper circuit-filter 10 times in a row in the past 11 trading sessions.
The stock price moved from Rs6.8 to Rs11.68—more than a 65% change. The move, according to equity brokers, is on the back of speculation that the company is set to fix a deal to sell its 10-storeyed building in Mumbai’s Bandra-Kurla Complex (BKC) premises, which is currently jointly held with Kotak Mahindra Bank, as collateral.
Mahesh Raj, chief executive of Apple Finance, declined to comment about the potential deal.
“If the building gets sold at a higher price than what we owe our creditors, the remaining money will come to our account,” Raj said.
Circuit-filters are ceilings fixed to control stock price movements in a single trading session, to safeguard investors from extreme volatility on any particular stock. The company had reported a loss of Rs3.65 crore at the end of fiscal 2007. It is now capitalized at Rs59 crore on BSE.
The controversial story of the Apple Finance building in BKC goes back a long way. In April 2005, Mangal Prabhat Lodha, the Bhartiya Janata Party’s (BJP) member of the legislative assembly from Mumbai’s posh Malabar Hill area, had made a Rs135 crore-bid for this building.
However, the Bombay high court decided to set a fresh auction, because the price quoted was low.
Later in January 2006, Jet Airways Ltd, the domestic aviator, made the highest bid of Rs206 crore during an open auction. The high court decided to auction the property to recover bank loans, after Apple Finance lost money.
Apple Finance had raised Rs75 crore loan from five public sector banks such asDena Bank Ltd, United Bank of India Ltd, Syndicate Bank Ltd, UCO Bank Ltd and Bank of Baroda Ltd by issuing debentures as well by mortgaging its 10-storeyed building as collateral.
However, Kotak Mahindra Bank bought these debentures, then worth Rs127 crore, from the five holders at a discounted Rs80 crore. This led to the scrapping of the Rs206 crore deal with Jet Airways.
It makes sense to fix up a deal now, as property prices in Mumbai have moved up significantly, says Anuj Puri, chairman and country head of Jones Lang LaSalle Meghraj.
“Kotak Mahindra Bank, which now holds the debentures, is taking the lead for the sale of the building. Although the matter is sub judice, a deal can be signed privately if both the parties, Apple Finance and Kotak Mahindra Bank, reach a mutual agreement on the price quoted by any potential buyer. The court will not intervene in such a situation,” Puri said, adding that the sellers could get around Rs300 crore at current market valuations.