SpiceJet, Sun shares tumble on scam scare
The raging telecom scandal linked to political corruption pummelled Sun Network and SpiceJet shares, causing serious dips in their market value as well as the wealth of its founder Kalanithi Maran. HT reports. How the market eclipsed Sunbusiness Updated: Jun 02, 2011 23:41 IST
The raging telecom scandal linked to political corruption pummelled Sun Network and SpiceJet shares, causing serious dips in their market value as well as the wealth of its founder Kalanithi Maran as his brother Dayanidhi’s role in his days as the country’s communications minister rocked the country in the wake of the 2G spectrum auction controversy that took his successor A Raja to jail.
The share fall tale was similar to Unitech, DB Realty and some ADAG group stocks, all embroiled in the scandal.
Sun TV and SpiceJet shares lost 27.9% and 16.1%, respectively on Thursday after reports came that Dayanidhi was named in a lawsuit in the 2G scam.
Sun TV and Spicejet that had market capitalisations of Rs 10,723 crore and Rs 1,396 crore at the end of the day lost a total of Rs 4,418 crore in aggregate at the stock exchanges on Thursday alone. This is 26.7% of the value of the two companies.The promoters (Maran family) lost a total of Rs 3,298 crore during the day on account of their holding in the two companies. The promoters hold 77% in Sun TV and 38.6% in SpiceJet as of March 2011.
If market experts are to be believed things do not look good for the stock unless the family comes out clean. “Things are only going to get murkier and no retail investor should buy the stock now. For those who already hold the stock should try holding it as it does not make sense to sell at such low valuation,” said SP Tulsian, an independent analyst. “There are very few retail investors in Sun TV and SpiceJet and the institutional investors are dumping the stock.”
Another expert with a South India-based brokerage firm said: “The stock of both the companies now depends on the investigations and fate of Maran.”