Transformers and Rectifiers shares plunge 30% in two days, hit lower circuit again

Synopsis

Transformers and Rectifiers (India) shares plummeted 10% for the second consecutive day following a profit dip and a World Bank ban due to alleged corruption. Despite the company's clarification that the ban has no material impact, investor confidence remains shaken, with analysts predicting further declines amid governance concerns.

Mumbai: Power equipment maker Transformers and Rectifiers (India) plunged 10% on Tuesday, hitting the lowest tradable limit in a trading session for the second straight day, after the company's profits dipped and the World Bank barred it from participating in its projects over alleged corruption.

The stock, once a Dalal Street favourite, has tumbled 30% in the past two days, extending losses for the eighth straight session. Transformers shares cut a portion of the losses mid-way through Tuesday's session after the company told stock exchanges it currently has no ongoing or pending orders under such projects, and this action has no material impact on its business operations. But the rebound was short-lived with investors further cutting their holdings. The stock closed at ₹282.2 on Tuesday.

Agencies

No Respite: World Bank ban over corruption charges continues to weigh despite co denying any material impact

Analysts said that the stock could see a further slide of around 8-12% from current levels

The company's consolidated net profit dropped 19% and consolidated revenue was down 0.3% in the September quarter compared to the same period last year.

"In contrast, industry peers reported steady growth and maintained margins amid a strong demand environment, raising concerns over TARIL's execution capabilities and its ability to meet aggressive growth targets," said Viraj Patil, research analyst, StoxBox.

Despite the company's clarification on the World Bank project ban, analysts said the episode is overshadowing the company's operational strength.

"The development sparks significant governance concerns among investors," said Om Ghawalkar, market analyst, Share.Market. "Though the company highlighted its robust unexecuted order book, which stands at ₹5,472 crore, this reassurance did little to stem the panic."

The price has fallen below its 200-day moving average, an indicator that the stock has entered a long-term downtrend, said Ghawalkar. "While the company's long-term fundamentals may be strong, the technical setup is bearish. The stock has strong support near the 200 level, which will be critical to watch in the coming sessions."

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