GTL Ltd. (GTS), whose market value plunged by more than half in Mumbai yesterday, said it may approach the market regulator after “speculative activity” by domestic investors triggered the record crash in its stock.
Shares of the company which manages telecommunication equipment for mobile-phone companies surged 11.1 percent to 142.15 rupees at 9:19 a.m. local time, the steepest gain since April 2007, after tumbling by a record 62 percent yesterday. Group company GTL Infrastructure Ltd. (GTLI) jumped 8.9 percent, the most since January 2010, to 18.45 rupees.
The sell-off “has nothing to do with medium and large investors, and is on account of speculative activity,” founder and Chairman Manoj Tirodkar told Bloomberg UTV in an interview. “Institutional investors have not voiced any cause for concern and there’s no panic. Long-term investors continue to believe in the business model. The fundamentals are intact.”
Speculation lenders sold GTL stock pledged with them by the company’s founders aided the slump. Founders, who own 52.71 percent of GTL, pledged 12.5 million shares, or 24.46 percent of their holding, according to an April 29 filing to the exchange. Creditors to the owners of the company haven’t sold the shares, Tirodkar said.
GTL has 78.7 billion rupees ($1.8 billion) of outstanding debt, while GTL Infrastructure has a total of 57.9 billion rupees debt, according to data compiled by Bloomberg.
“There are significant concerns regarding GTL’s funding position and I think somewhere the promoter’s shares which have been pledged must have been hit,” said Sudip Bandyopadhyay, managing director of Destimoney Securities Pvt. in Mumbai. “How else can one explain such a steep fall.”
GTL Infrastructure bought 17,500 telecom towers from Aircel Ltd. in July 2010 for about 80.3 billion rupees, while its plan to acquire the phone towers from Reliance Communications Ltd. fell apart in September. The company has a portfolio of over 30,000 towers located across India, according to its website.
“We are advising investors to avoid GTL group stocks until things become clear,” R.K. Gupta, managing director at New Delhi-based Taurus Asset Management Ltd. said on the phone. “It seems that selling of pledged shares has triggered a margin call on the stock counters.”
India’s benchmark stock index fell to a four-month low yesterday after a report the government sought to tax capital gains on investments routed via Mauritius sparked a sell-off.
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