Mumbai: Trading in non-banking finance company (NBFC) Manappuram Finance Ltd’s shares halted because of a sharp fall on Tuesday after the company said it expected a loss in the January-March quarter.
Shares of Kerala-based Manappuram Finance ended trading at Rs.27.70 on the BSE, down 19.94% from Monday’s close of Rs.34.60 per share.
“The company had a conference call today where they guided for a Rs.50 crore loss in the current quarter from earlier expectations of a Rs.90 crore profit mainly because of under recoveries from gold auctions,” said Santanu Chakrabarti, an analyst at ICICI Securities Ltd.
Some stocks have a 20% circuit filter whereby trading halts if the stock either rises or falls by that limit.
Companies such as Manappuram, which give loans against gold, sell the pledged gold if the buyer fails to repay the loan.
“The price of gold fell, which led to the under recoveries and these loans were from the August 2011 to January 2012 period when the loan-to-value ratio was higher,” Chakrabarti said.
NBFCs like Manappuram used to give 80-85% of the value of gold pledged as loans until March 2012 when Reserve Bank of India (RBI) asked them to lower this to 60%.
Chakrabarti, however, said the company has forecast a better-than-expected profit for 2013-14. Chakrabarti has a “buy” rating on the stock.