NCLT declares GVK Power bankrupt; stock hits 5% lower circuit

The National Company Law Tribunal's (NCLT's) Hyderabad bench has declared GVK Power and Infrastructure Ltd (GVKPIL) as bankrupt and initiated corporate insolvency resolution process (CIRP) for defaulting on a loan of Rs 18,000 crore (including interest) to ICICI Bank and a some other lenders. GVKPIL is the flagship firm of the GVK group.

The loan was availed by GVK Coal Developers (Singapore) Pte Ltd over a decade ago for which GVKPIL was the guarantor.

The NCLT bench comprising Rajeev Bhardwaj, member (judicial) and Sanjay Puri member (technical) pronounced the order on July 12, which was released yesterday, in a petition filed by ICICI in 2022.

On the stock-specific front, GVK Power shares were locked in the lower circuit level of 5 per cent at Rs 9.64 on Tuesday. At this price, the counter was down 14.61 per cent in a month.

Bourses BSE and NSE have put the securities of GVK Power under the long-term ASM (Additional Surveillance Measure) framework. Exchanges put stocks in short-term or long-term ASM frameworks to caution investors about high volatility in share prices.

The scrip saw heavy trading volume on BSE today as around 31.16 lakh shares changed hands at the time of writing this story. The figure was higher than the two-week average volume of 8.91 lakh shares. Turnover on the counter came at Rs 3.01 crore, commanding a market capitalisation (m-cap) of Rs 1,522.36 crore.

On technical setup, the counter traded lower than the 5-day, 10-, 20-, 30-, 50-, 100-, 150-day and 200-day simple moving averages (SMAs). The counter's 14-day relative strength index (RSI) came at 27.42. A level below 30 is defined as oversold while a value above 70 is considered overbought.

The company's stock has a price-to-equity (P/E) ratio of 248.65 against a price-to-book (P/B) value of 1.83. Earnings per share (EPS) stood at 0.04 with a return on equity of (RoE) 0.73.