Selloff in Amtek Auto Hits Shares of Group Companies

The selloff in Amtek Auto shares widened to its other group companies on Monday. Castex Technologies, an Amtek group company, fell 5 per cent to hit a low of Rs 46.95. Other group companies Metalyst Forgings and JMT Auto also slumped 5 per cent. All these three Amtek Group companies were locked in lower circuit on the BSE and NSE.

Meanwhile, Amtek Auto shares plunged 11.6 per cent to close at Rs 29.

Over the last one month, Amtek Auto shares plunged nearly 82 per cent as compared to a 10 per cent fall in the Sensex.

Foreign funds have been selling shares of Amtek Auto. According to the NSE data, on Friday, Goldman Sachs Investments Mauritius sold 1.6 million Amtek Auto shares  while Swiss Finance Corporation (Mauritius) Limited sold 2.7 million shares. On Thursday, Barclays Capital Mauritius Ltd sold 1.2 million shares on Thursday.

Meanwhile, JP Morgan Mutual Fund had earlier restricted redemptions from two of its debt schemes - Short Term Income Fund and India Treasury Fund - following a decline in NAVs (net assets value) of the schemes due to fund house's exposure to Amtek Auto's debt papers. These schemes have a collective exposure of around Rs 200 crore in Amtek Auto. The decline in NAVs was triggered after a rating agency withdrew its rating on these debt instruments, after rating them quite high earlier. (Click here for full report)

Rising concerns about liquidity issues is the biggest reason for the slump in Amtek Auto shares, analysts say. Amtek Auto has acquired huge debts over the last few quarters in order to acquire a string of companies, analysts say. The company's debt/equity ratio of about 1.5 times is among the highest for auto component makers across emerging economies in Asia Pacific, according to StarMine data.