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SEBI Smells Something as It Decides to Investigate Fall in Indigo’s Stock Price

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The Securities Exchange Board of India (SEBI) is looking into the matter of InterGlobe Aviation Ltd’s share price drop ahead of the exit of its former CEO and president, Aditya Ghosh. It was the worst drop for the company’s stock in about seven months. The regulator is naturally concerned about the worst fall since there was no other information or filing with it to warrant negative sentiments. The overall stock markets were also not bad on April 27 when the stock price suffered.

Delay in Disclosure

The SEBI is enquiring into the 6.1 percent fall in IndiGo shares and the reasons for the delay in the company’s disclosure about the exit of Aditya Ghosh, BloombergQuint reported. Ghosh has tendered his resignation as a director on April 26 itself whereas the company made the announcement the following day only. However, the company believes that it has complied with the listing requirements of all stock exchanges in respect of the announcement. There was a natural concern whether any insider trading has happened and that any rules were breached.

The market regulator has been forced to make a review of stock-price data to find out whether the company has complied with market-sensitive information. SEBI also showed its interest to get details about the move of Ghosh from those who are connected with him. However, there was no confirmation from either the company or the regulator about the latest developments. Both are remaining tightlipped officially.

Ghosh has been instrumental in shaping up the airline company in the last ten years. He has been a public face for the company in the last one decade as the promoters, Rahul Bhatia and Rakesh Gangwal, remained elusive from the media and the limelight. Significantly, his exit came at a time when the company is in the process of changing its policies. This included moving towards mixed fleet rather than operating one aircraft class. Its proposal also envisaged acquiring planes outright rather than leasing them. These apart, there was a planning for long-haul and new low-cost service.

After the exit of Ghosh, Rahul Bhatia was appointed as IndiGo’s interim CEO. The airline firm also disclosed that it could consider Gregory Taylor as its new president and CEO. He worked earlier with the company as an EVP of revenue management and network planning during the year 2016-17. The company’s statement indicated he was appointed as senior advisor to the board.

Top Position

Earlier Dubai-based Martin Consulting LLC founder and CEO, Mark Martin, has reacted to the development. He told Business Standard that “Ghosh has been instrumental in bringing IndiGo to the top position in Indian aviation over the past 10 years. Indigo shares may have a temporary blip as they are overvalued. We don’t expect a major selloff as Indigo still has good leadership and are strongly entrenched in the aviation business.”

The low-cost carrier has been operating over 1000 flights a day. On Wednesday, IndoGo shares dropped 3.68 percent at the BSE while the fall at the NSE was 3.89 percent.

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