The Gujarat Energy Transmission Corporation Ltd (GETCO) said that it would no longer do business with the company for a period of three years on the grounds that it has allegedly submitted forged Material Dispatch Clearance Certificates (MDCC) relating to transformers supplied by it.
The share price of Transformers and Rectifiers (India) suffered a deep cut and hit the 20 percent lower circuit after it received a ‘Stop Deal’ notice from GETCO. At 01:45 PM on Monday, its shares were locked at ₹ 85.70 apiece, with only sellers and no buyers.
In an exchange filing, the company said that the Contract was awarded for the supply of a total of 29 Transformers and 1 Reactor. It has already provided 24 transformers and 1 reactor to GETCO in accordance with the contract. Moreover, it has successfully completed additional inspection tests in accordance with GETCO’s specifications and the transformers and reactor are in use at GETCO.
The company added that it is taking the required actions to defend its position against this allegation and to resolve this matter.
In spite of the steep fall that it suffered on Thursday, the company remains a multibagger with 191.50 percent returns in the past year and 382.82 percent returns in the past five years.
Transformers and Rectifiers (India) Ltd manufactures a wide variety of transformers and switchgear. It is a small-cap company with a market capitalization of ₹ 1,420 crores. It has a low return on equity of 10.86 percent and an ideal debt-to-equity ratio of 0.84. Its shares were trading at a price-to-earnings ratio (P/E) of 34.88 which is higher than the industry P/E of 29.53, indicating that the stock might be overvalued as compared to its peers.
The company’s promoters hold a 74.91 percent stake in it followed by retail investors with 25.06 percent and foreign institutions with 0.03 percent.
Written by Simran Bafna
