Hindustan Construction Co share price plunged to an over two-year low on Friday as the company is set to conduct rights issue on a heavy discount, which weighed on sentiment for the stock. It is offering almost 50% discount for its rights issue.
The issue price 12.50 apiece, which includes a premium of Rs 11.50. It is payable on application. This indicated a discount of 49% from the current market price.
A high discount for rights issue implies the urgency for funds, which creates a negative sentiment.
The board of Hindustan Construction Co approved the issuance of 79.99 crore rights equity shares to raise up to Rs 1,000 crore, it said in the exchange filing on Tuesday.
HCC has fixed December 5 as the record date for the rights issue. Rights issue will open on Dec 12, and it will close on Dec 22.
Some investors are aggressively booking profits after the news of rights issue because of the dilution without an immediate increase in the company's value. Outstanding number of shares will be 261.94 crore post rights issue compared to 181.94 crore.
HCC share price slumped 22.94% to Rs 19.99 apiece, the lowest level since Aug 9, 2023. It was trading 20.18% down at Rs 20.71 apiece as of 10:23 a.m., which implies 0.24% advance in the NSE Nifty 50 index.
The stock declined 45.31% on a year to date basis. Total traded volume so far in the day stood at 7.0 times its 30-day average. The relative strength index was at 42.43.
Two analysts tracking the company maintain a 'buy' rating, according to Bloomberg data. The average 12-month consensus price target implies an upside of 70.0%.
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