This stock has destroyed 99% investor wealth in the last 10 years


ngineering and construction firm Punj Lloyd has emerged as one of the biggest wealth destroyers, tanking over 99 percent in the last 10 years. The stock, which traded over Rs 200 in 2009, is currently trading at around Rs 1.5 per share. To put into perspective, an investment of Rs 1 lakh in the stock in 2009 would have reduced to Rs 1,000 today.

The stock has tumbled over 90 percent in the last one year after the insolvency proceedings were initiated by ICICI Bank against the company. The company’s market cap, which currently stands at Rs 50.44 crore, was around Rs 6,500 crore in 2009. It has eroded over Rs 6,400 crore investor wealth in the period.

The stock hit an all-time high of Rs 589 on January 4, 2008, while it hit its all-time low of Rs 1.35 per share on February 19 this year.

On March 8 last year, the National Company Law Tribunal admitted corporate insolvency plea against Punj Lloyd. ICICI Bank had filed an application before NCLT against Punj Lloyd alleging default by the company in June 2017.

Punj Lloyd has total debt of around Rs 6,000 crore, out of which Rs 854 crore is owed to ICICI Bank.

The company, on May 29, 2019, requested for an extension of 60 days to report its financial results for the March quarter and FY19 amid the ongoing insolvency resolution process.

For the December-quarter, the company’s loss widened to Rs 2,795.06 crore from Rs 183.9 crore in the year-ago quarter.

Punj Lloyd said that there were delays, defaults in repayments of substantial dues to lenders and that it was taking various measures, including monetising its identified assets as avenues of raising funds. It further added that due to delay in restructuring, the firm was unable to generate the expected profits in the current period, and had to revise its estimates for future taxable income.

Recently (in May 2019), Punj Lloyd initiated arbitration against the Libyan government-owned Sirte Oil, seeking to recover Rs 1,300 crore in dues. The company moved the International Chamber of Commerce (ICC) for arbitration, alleging the Libyan company had unilaterally expanded the scope of a five-year project that was signed only for laying gas pipelines between 2006 and 2011.