Ri­coh In­dia Stock Falls into ‘Z’ Cat­e­gory as Co Sees Tur­bu­lence

The Economic Times - - Smart -

ET In­tel­li­gence Group: Shares of Ri­co­hIn­dia,have­fallen25%inthe­last six ses­sions af­ter the stock was clas­si­fied as ‘Z’ cat­e­gory by the BSE af­ter it failed to de­clare quar­terly re­sults.

The of­fice equip­ment and ser­vices firm, which was the dar­ling of the Street un­til a few months ago, is now fac­ing sev­eral is­sues. To be­gin with, it has not de­clared its re­sults since the Septem­ber quar­ter. In­vestors were given as­sur­ance by the top man­age­ment that the com­pany was in ro­bust health through a no­tice on the stock ex­changes. Its Ja­panese par­ent said in De­cem­ber quar­ter re­sults, “Overseas IT ser­vices ex­panded on solid per­for­mance of In­dian op­er­a­tions.”

What added to the shock is that the In­dian arm asked three top guys — CEO, CFO and COO — to go on leave, thus creat­ing panic in its stock price.

“In or­der to en­sure, there is a fair ver­i­fi­ca­tion, some peo­ple are asked to go on leave,” said Manoj Ku­mar, exCEO of Ri­coh In­dia who an­nounced his res­ig­na­tion on Mon­day. He said he has stepped down for per­sonal rea­sons. “In­vestors should ac­tu­ally wait for the re­sults to come out which I be­lieve will be out soon,” he said.

Some an­a­lysts track­ing the com­pany say that there could be a one-time hit on the bot­tom line but the top line growth should re­main in­tact.

The­m­an­age­men­thad­givenop­ti­mistic fu­ture outlook, a guid­ance of over 50% growth for FY16 and FY17. Al­though mar­gins were thin for the hard­ware busi­ness, the fast-grow­ing ser­vices­busi­ness­with15-20%mar­gin was ex­pected to im­prove profitabil­ity.

The po­ten­tial is­sues could be with the rev­enue recog­ni­tion, billing or with the re­ceiv­ables, but one will have to wait for the re­sults to know real rea­son for the de­lay.

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