Elecon has been among the companies that are losing sleep over the wreaking Rupee. A steep drop in the Rupee against the US Dollar is giving sleepless nights to a group of company promoters, who had borrowed money through foreign currency bonds (FCCBs) that are due for conversion now. 35 companies have outstanding FCCBs worth $1 billion, which will be maturing by the end of March 2017. FCCB is a tool used to raise funds by issuing debentures denominated in other currencies like the dollar. Elecon’s FCCBs are maturing on 30th November 2016.
However, Elecon’s strong fundamentals have held on to the stock, taking Elecon share price to the surge of 10 per cent intraday today on NSE.
FCCBs typically carry a clause that gives bondholders the alternative to convert the bonds into shares midway. If the share price of the company trades below the issue price, the companies are obligated to repay the borrowed amount. As the repayment of the raised amount has to be done in Dollars, the liability of the company grows when the Rupee rises. And so, the declining value of Rupee is worrying Elecon along with other such companies.
At 2:39 PM, Elecon share price was trading at Rs. 52.05, up by 8.10 per cent.
Also, Elecon has posted Rs 3 crore net loss against the Rs 2.5 crore net profits in Q2FY16 on the back of 15 per cent yoy rise in finance cost. Revenue for the quarter decreased 13.3 per cent yoy to Rs 202 crore while EBITDA decreased by 47.4 per cent yoy to Rs 18.12 crore led by contraction in EBITDA margins by 582 bps yoy to 9 per cent. Other expenses increased by 6 per cent and manufacturing expenses & erection charges increased by 4 per cent.
Elecon is the top 500 recommendation by Dynamic Levels for the quarter. For the details on the stock, visit Elecon share price history page of Dynamic Levels website.
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