2G-tainted stocks plunge on fears of asset seizure

Mumbai: An assurance by the Enforcement Directorate (ED) to the court overseeing the 2G telecom scam investigations that it will soon move to attach properties of firms allegedly involved in the scam sent investors offloading the stocks of Reliance Communications, DB Realty and Unitech on Thursday.
While RCOM tanked 5.1% to Rs 99.85, DB Realty lost 4.2% to close at Rs 99. Unitech crashed 7.5% to settle at Rs 37.40. All the three firms are being investigated by CBI and ED for multiple rule violations during the spectrum allocation process and several of their top executives are in custody. All the firms have denied any wrongdoing.
The RCOM stock closed below the Rs 100-mark again after staying above the three figure mark for one-and-a-half months. The last time it had closed below this level was on March 11 at Rs 96.30. Other than the possibility of assets seizure, the group companies and executives of these firms could also face action from investigative agencies, market players said. So far, the only saving grace is that the lawyer representing the government agencies, K K Venugopal, has not named the companies.
The companies that have been named in the chargesheets filed by the CBI include Reliance Telecom, a wholly-owned subsidiary of RCOM, Unitech Wireless, a Unitech group company, and Swan Telecom, now Etisalat DB Telecom, which is partly owned by the DB Realty group. Executives from these groups, along with former telecom minister A Raja and his associates, have been named by the CBI.
Bloomberg quoted Unitech as saying that it has not been named in the CBI chargesheet and the matter pertains to Unitech Wireless, a “separate legal entity”. DB Realty said none of its properties were being attached by the ED and “neither have we received any intimation on the above from the concerned authority”.
Given the current situation in the 2G scam investigation, dealers expect analysts to cut their target prices for these stocks. Interestingly, on February 15, foreign broking major JP Morgan had stopped its coverage of DB Realty saying the company’s fundamentals did not match up to the company’s stock price. As per Bloomberg data, Antique Stock Broking has a target price of Rs 209 for the Mumbai-based realty firm, which was set on March 3 and is still unchanged. For RCOM, HDFC Securities has a target price of Rs 123, set on Tuesday. And for Unitech, JP Morgan set a price target of Rs 60 on March 23 while Antique set a target price of Rs 102 on March 3.