In the last few years, many giant stocks have disappointed investors. Not only disappointed, even broke trust. They have come down on the floor. Many of these even went bankrupt. In some, trading was halted because the value of their shares had become unaffordable. These companies include Unitech, Suzlon, Vodafone Idea, Reliance Capital, Reliance Communications, Reliance Power, MTNL, Jaypee Associates, Yes Bank. These are the stocks that were once the pride of Nifty 50 index. Today the situation is that no one is even going to ask their feelings.
The story of all these going down is also very similar. In most of these cases, the debt burden on companies became so high that they could not recover. To pay off the debt, he took more loans and this cycle of debt kept on trapping him. A day came when companies raised their hands. Due to this, they were either acquired by some other company or they settled down in business. If anyone suffered the most in this entire exercise, it was the retail investors.
Retail investors were hit the most
Take the example of Anil Ambani Group’s Reliance Capital. The public shareholding in this company was more than 94 per cent. Recently, after the value of the company’s shares went down to zero, investors were completely shocked. Reliance Capital was in debt for a long time. The resolution process of the company was reviewed by a committee of creditors on Wednesday. The bidding process for the company ended on August 29. IndusInd Bank, US-based asset management company Oaktree Capital and six companies of Torrent Group have bid for the acquisition of Reliance Capital. Trading in the shares of the company has been stopped. All shares have been debited from Demat.
This is the reason why experts advise investors to go through the balance sheet before investing in a stock. No matter how big the company is, its debt can be within a range. If the debt exceeds the assets of the company, then alarm bells start ringing on it. There are many other indicators which tell about the financial condition of the company.
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|Reliance Communications||trading off|
|Reliance Capital||trading off|
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