Ashoka Buildcon Staged a Sharp Recovery After 20% Plunge in Stock Market
Ashoka Buildcon is the one of the largest developer of highways and roads in India. Following a staggering 20% loss of its stock on Wednesday, the company has staged a sharp recovery.
Two Indian government agencies, Enforcement Directorate (ED) and Income Tax (I-T), on Tuesday, conducted a raid at the company's premises in Nashik, Maharashtra. Following the raid, shares of Ashoka Buildcon plunged on Wednesday. The raid was conducted to search for evidence of money laundering case in a certain construction project.
CNBC India reported the joint operation was conducted based on allegations that the company financed certain constructions by family of former Maharashtra Deputy Chief Minister Chhagan Bhujbal. The former minister Chhagan Bhujbal had been arrested last month in a money laundering case.
The ED and I-T formed three teams to conduct search in three separate locations. They are the Ashoka Buildcon's office in Vadala locality, office at a toll naka in Pimpalgaon Basawant and at the house of Ashok Katariya, company's founder and chairman.
Ashoka Buildcon had clarified on March 26 that it has not contributed or financed any of the constructions of Bhujbal family. The company also clarified that it has not sponsored the trip of former parliament member, Sameer Bhujbal, to watch the FIFA World Cup in South Africa in 2010. The company made the clarification as the media mentioned Ashoka Buildcon to be related with the money laundering allegation against Chhagan Bhujbal and family.
Despite the clarification, the Enforcement Directorate and Income Tax made the joint-searches on Tuesday. Business Standard reported that the raid was made as senior leader at BJP Kirit Somaiya claimed that Ashoka Buildcon was connected to Chhagan Bhujbal in some ways. He submitted documents to support his claim to Nashik police commissioner on March 25.
Meanwhile, in a filing to the Bombay Stock Exchange (BSE), Ashoka Buildcon declared that it had no connection with Chhagan Bhujbal. In the filing the company wrote, "Ashoka Buildcon Ltd clarifies that it has not contributed or financed any of the constructions of Bhujbal family including their Bungalow at Nasik."
Shares of the company fell drastically to 20% on Wednesday following the raid. Cumulative loss in two days on Wednesday reached to 35% and the shares hit the lowest in 52 week to Rs 111 ($1.67).
According to NDTV, Ashoka Buildcon is preparing to stage a sharp recovery of its stock. In Thursday's trade at the NSE, the company's stock was closing 3.91% higher at Rs 141 ($2.12).
As one of India's largest highway developers, Ashoka Buildcon is a company with a good portfolio. Therefore, after its sharp plunged in Wednesday, the company has prepared to make a sharp recovery.