Indian company share prices sluggish in H1 2018

Anuj Chande Anuj Chande

The Grant Thornton India Watch share price index was down 14.4% in H1 2018, while our Small Cap index suffered a decline of 6.5

The 14.4% decline in the India Watch Index during the first half of the year was largely due to the share price performance of Vedanta Resources PLC. This was in contrast to a 3.1% gain in the FTSE AIM 100 for the same period, while the FTSE 100 showed a slight decline of 0.7%.

The India Watch Small Cap index continued to fall in H1, with the 6.5% decline due to significant falls in several stocks, such as KSKPL Power Ventur PLC, Mortice Limited and Mercantile Ports & Logistics Ltd.

Despite this, the decline appears to be slowing amid signs of faster growth returning to India’s economy.

Although job creation remains sluggish, India remains the fastest growing G20 economy1, with growth in 2019 expected to be 7.8%, compared to a predicted 6.4% in China over the same period2. This growth forecast assumes smoother implementation of the goods and services tax (GST) as well as the benefits of demonetisation reform gradually coming to fruition following a rocky transitional period1.

Despite this there are still a number of issues to be dealt with: credit conditions for private companies are currently poor and bad loans by public sector banks have left them in significant need of recapitalisation. Given that capital generation and expenditure in the private sector remains low, it appears that optimistic GDP growth figures are being skewed favourably by public spending3.

Looking ahead, growth is likely to be supported by an acceleration in private investment and a number of infrastructure projects coming to maturity. Further bedding-in and better implementation of GST is likely to drive competitiveness, enhancing exports and making India more attractive to private investors4.

Graph 1. Share price indices – year to date

Winners and losers in H1 2018

 iEnergizer Ltd was H1’s biggest winner in share price terms, boasting an impressive gain of 43%. The company and its subsidiaries provide business process outsourcing (BPO), content delivery and back office services in the UK, India, US and internationally. Its H1 share price performance is in contrast to the slump seen around the turn of the year. This recovery has been driven primarily by strong organic growth following the announcement of interim results in November.

Koovs PLC, the online fashion retailer often described as the ‘ASOS of India’ was H1’s second biggest winner, with a share price gain of 36%. This recent performance is underpinned by the announcement of a conditional agreement for a two-year GBP24 million media deal with HT Media. Under the agreement Koovs will acquire four GBP6 million tranches of media from HT Media at six-monthly intervals, 70% of which will be satisfied by issuing new ordinary shares in the company to HT Media.

The third largest winner of H1 was Pelatro PLC, which saw a 31% increase in share price over the six months. The company designs and develops enterprise software that offers precision marketing solutions for use in business-to-consumer applications. Following its admission to AIM in December, the share price rose sharply before settling in mid-January. Since then the share price has remained relatively stable, with sporadic periods of volatility brought about by the announcement of a contract win with a Western European telco and the release of the company’s annual report. 

On a more negative note, KSK Power Ventur PLC, which develops private power projects in India and builds and operates power stations, was H1’s biggest loser, with a share price fall of 85%.  The share price had remained relatively stable through the latter stages of 2017 and the early part of 2018, however it fell sharply in April. This followed the announcement by the Reserve Bank of India of a revised framework stipulating that companies heavily geared in favour of debt should restructure to reduce their exposure. The passing of this legislation had a significant impact on the company’s KSK Mahanadi project, which at the time had a debt to equity ratio of 6:1.

With a fall in share price of 68%, Mercantile Ports & Logistics Ltd, a developer, owner and operator of port and logistics facilities in Guernsey and India, was H1’s second largest loser. The share price dropped following continual delays in final customs approval from the relevant authorities at the company’s Karanja site in India. The share price has since shown a slight recovery on the basis that end of year financials show the outlook for the company is positive following a year of consolidation. 

Mortice Ltd, a provider of integrated property services in India, was the third biggest loser of H1, suffering a share price fall of 40%. The share price dropped dramatically following the announcement that Richard Gubbins resigned as an Independent Non-Executive Director in August only to recover shortly after as the board made it aware that they intended to further the acquisition of Office & General Group Limited (“O&G”)and approve an off-market buyback of a number of shares from the vendors of O&G. Publication of the Company’s interim results in November saw the share price decrease further as although trading activity had increased, profits were down some 15%.


  1. OECD, India – Economic Forecast Summary, May 2018
  1. Forbes - India’s economy on track to beat China, April 2018
  1. Financial Times - India’s Growth threatened by rising oil prices, July 2018
  1. Economic Times - Views on India’s growth prospects post economic survey, January 2018