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Why RCOM rallied 66% TODAY and may decline 66% TOMORROW!

Swedish telecom equipment maker Ericsson moved to the National Company Law Tribunal’s (NCLT) Mumbai bench to recover Rs 1150 crore in dues which effectively makes the Anil Ambani owned carrier bankrupt, the second such after Chennai-based Aircel.

Now:

Day 1 : MAY 16, 2018, 07.26 PM IST

NCLT admits Ericsson's bankruptcy plea against RCom, subsidiaries. The dedicated bankruptcy court has admitted three insolvency petitions filed against Reliance Communications and its subsidiaries, by telecom gear maker Ericsson, dealing a severe blow to the telco’s plans of selling most of its wireless units to Reliance Jio Infocom (Jio).

STOCK PLUNGED 16%

PANIC EVERYWHERE!

Day 2: Thu, May 17 2018. 05 36 PM IST

Ericssion agreed to settle 1,154 Cr. out of court with RCOM. This news provided some hope that RCOM would be able to avoid insolvency proceedings. Further, insolvency proceedings would also put a hold on any asset sales. This would have stopped RCOM’s asset sale to Reliance Jio.

RCom shares surged 65%

However, it remained to be seen whether the NCLT would accept this new arrangement and would roll back the insolvency proceedings. Investors were warned to use this opportunity to exit the stock, as there is still a lot of uncertainty surrounding the future of RCOM.

Result??

Day 2 : Thu, May 17 2018. 09 32 PM IST

Let's see what happens tomorrow. God may save RCOM Investors.

[Author is SEBI Regd. Research Analyst]

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