Why are IL&FS subsidiaries shares rising? Stocks jump by 10% to 20%
Investors continue to buy IL&FS Investment Managers, IL&FS Engineering & Construction Company and IL&FS Transportation Network stocks even as beleaguered parent stumbles from one crisis after another.
Currently in dire need of financial aid, the Mumbai-based Infrastructure Leasing & Financial Services (IL&FS) subsidiaries have been soaring to extreme levels despite the benchmark Sensex index having tumbled by over 325 points. IL&FS has turned into a defaulter on a few payments and failed to service its commercial papers on due date. In other words, IL&FS does not have any cash to fall back on to keep up with its repayments - it is in a horrible liquidity crunch. However, this did not matter in today’s trading session, as investors continued to buy stocks in IL&FS Investment Managers, IL&FS Engineering & Construction Company and IL&FS Transportation Network.
IL&FS Investment Managers has touched its upper circuit and was trading at Rs 9.43 per piece up by 9.91%.
Similarly, the IL&FS Transportation Network, which has created the most debt for the group, was trading at intraday high of Rs 32.30 per piece up by 19.85%.
Even IL&FS Engineering & Construction Company was not faraway, as the share price was trading at Rs 19.22 per piece above 19.98%.
On October 01, the above three mentioned companies stated that, the present Board of Directors of Infrastructure Leasing & Financial Services Limited (IL&FS), the promoter of the Company has been suspended with immediate effect and 6 new directors have been inducted on the Board of IL&FS.
Further, the Mumbai NCLT also allowed the ministry of corporate affairs to take control of the board.
The newly elected board involves some major names, and one can soon expect a detailed guidelines for future course of IL&FS.
These members are - Uday Kotak MD of private lender Kotak Mahindra, former IAS officer & Tech Mahindra boss Vineet Nayyar, G N Bajpai former Sebi chief, G C Chaturvedi former ICICI Bank chairman, former IAS officers Malini Shankar and Nanda Kishore.
The new board is expected to meet before October 08.
Also, according to ET Now report, the Serious Fraud Investigation Office (SFIO) kicked off its probe into alleged financial irregularities at Infrastructure Leasing & Financial Services (IL&FS) by questioning the top management, searching the group’s offices and gathering information from its servers, a senior government official said. The agency will also question the ousted directors and former chief Ravi Parthasarathy.
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