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Ultracab Promoters Offloaded Most of their Shares in Q3 FY-24, Stock Nosedives

Ultracab (India) Ltd. [BOM: 538706], an Indian manufacturer of cables, has reported a significant change in its shareholding pattern at the end of Q3 FY-24, with promoters offloading a major chunk of their shares over the course of 2023-24 fiscal so far.

Moreover, share price of the company continues to tumble after being on a downward spiral since early January 2024.

Shareholding of Ultracab’s promoters dropped to 27.9% as on 31st December 2023. Analysing Ultracab’s shareholding pattern, it is evident that the promoters of the company started lowering their shareholding since Q1 of FY-24.

As on 30th June 2023, the promoters held 62.12% of Ultracab’s total shares while the rest were held by public. Subsequently in the company’s shareholding statement for Q2 of FY-24, Ultracab stated that the promoters of the company owned 59.69% of the shares. This trend of offloading shares has continued into Q3 of FY-24.

Ultracab Stock Plummets by over 18%, Continues to Fall

Ultracab Rajkot Facility
Ultracab’s Rajkot Manufacturing Unit

Ultracab’s share prices have been falling steeply since 10th January 2024. As reported by Moneycontrol on 12th January 2024, Ultracab shared its shareholding pattern at the end of Q3 of FY-24 on 10th January 2024.

Within 6 days since then, the company’s share price has fallen by 18.45% to Rs. 21.44 apiece on 16th January 2024 from Rs. 26.29 apiece on 10th January 2024. Moneycontrol reports that investors have been dumping their stock in response to the drastic change in Ultracab’s shareholding pattern.

Sale of Promoters’ Holdings not Declared to SEBI, Ultracab Clarifies

Ultracab had not filed any disclosure to stock exchanges about the sale of its promoters’ shares during Q3 of FY-24.

Ultracab’s Clarification Post Shareholding Pattern Declaration

In a stock filing dated 10th January 2024, the company clarified that the sale of Ultracab’s promoters’ shares are not subject to disclosure under Securities and Exchange Board of India (SEBI) Regulations (Depositaries and Participants) 74(5), 2018.

Stating the reason for this, Ultracab’s filing says, “…the entire holding of the Company’s shares are in demat form and we have not received any request from any members of the Company for dematerialisation or rematerialisation, during the quarter ended on 31st December, 2023”.

Moneycontrol Speculates Sale Value to be over Rs. 10 lakh, Suggests SEBI Norm Violation

Even as Ultracab made its position clear about not disclosing the aforementioned shares, Moneycontrol speculates that the company’s non-disclosure might be in violation of a different SEBI regulation.

Based on Ultracab’s market cap, Monecontrol’s article speculates that the value of shares sold by the promoters in Q3 of FY-24 is ‘definitely’ over Rs. 10 lakh. This is in violation of SEBI (Prohibition of Insider Trading) Regulations, 2015, which reads: Every promoter, member of the promoter group, designated person and director of every company shall disclose to the company the number of such securities acquired or disposed of within two trading days of such transaction if the value of the securities traded, whether in one transaction or a series of transactions over any calendar quarter, aggregates to a traded value in excess of ten lakh rupees or such other value as may be specified.

While no details about the matter are available other than Moneycontrol’s report, the market seems wary of investing in Ultracab’s stocks for now.

About Ultracab: Ultracab (India) Ltd. is an Indian manufacturer of wires and cables with a manufacturing facility in Rajkot, Gujarat. The company had reported a revenue of Rs. 107.36 crore for FY-23.