Sadbhav Engineering terms allegations of siphoning money as baseless - Angel Broking

According to a media report, the Company Law Board (CLB) has passed an interim order for conducting forensic audit of the accounts of Bijapur-Hungud Tollway, a subsidiary of Sadbhav Engineering. It also alleges that the company has understated toll revenue from the project as well as siphoned off Rs. 200cr from the subsidiary.

The company has termed these allegations as incorrect and baseless. The company admits that a minority shareholder had made allegations of diversion of funds before CLB. However, the company has clarified that CLB had not confirmed these allegations. Its interim order had merely permitted the shareholder to inspect the statutory records of the project and directed the company to install a system to have online viewing facilities of the toll-booths. Further, High Court of Gujarat in its 21st Feb, 2014 order stayed CLB's order on the matter.

Post the news, the company's stock had fallen almost 20% to Rs. 73. However, after the company's clarification, the stock recovered most of its losses to close only ~3% down from day's opening price. We recommend Neutral rating on the stock.

Source : Equity Bulls

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