UPL Stock Ends 11% Lower On Report Of Whistleblower Complaint - Now What to do Next ?

UPL shares declined over 11 percent intraday on December 10 after reports made rounds that a whistleblower has accused promoters of siphoning funds.

The whistleblower alleges that UPL entered into rent deals with the shell company owned by its employees and paid crores in rent for properties held by the latter, which was earlier owned by UPL chief Jaidev Shroff himself, Economic Times reported.

According to the details submitted by the whistleblower, there seem to be certain corporate governance issues with regards to transactions done by promoters of UPL.

The stock was trading at Rs 425.25, down Rs 67.05, or 13.62 percent at 10:59 hours. It has touched an intraday high of Rs 479.90 and an intraday low of Rs 416.05.

In an interview to CNBC-TV18, UPL CEO, Jai Shroff, said that the Board has not received any whistleblower complaint. There is access to all information including legal opinion. The company has given all necessary clarifications.

UPL denied the whistle-blower is a member of the board as reported in the media as these allegations were discussed and investigated by the Audit Committee and the board in 2017-2018. An identical whistle-blower complaint was received by the audit committee of UPL on June 2, 2017. The Whistle Blower Committee, which comprised only independent directors, was constituted by the Audit Committee to investigate the allegations and all the contents of the complaint was fully disclosed.

It undertook a detailed review, including each related party transaction (RPT), with the help of an independent law firm, and had concluded two and half years back that those transactions were at arm’s length and in compliance with applicable laws. Thereafter, the complainant was duly informed about the findings of the Audit Committee and the matter was closed.

Now What to do Next?

Today UPL closed on Rs 438.45. As it declines 11% in a single day so the next day movement is very important in such a type of fall. But still, there is a huge possibility then it will not give more panic to their holders. If we talk about the support area then 395-405 is a very strong support area for UPL and hope it will respect it. 

If you have this stock and you are feeling trapped then you should wait for the next day movement and do not exit in a panic until it breaks its support range. There is also a possibility it may test support levels once but closing above the support level is very crucial for it.

 

Disclaimer: This Study is based on the theory of technical analysis and personal observations. This does not claim for Profit & Loss. 
We are not responsible for any profit or losses made by traders and investors. It is only the outlook of the market with reference to its previous performance. 
All information is a point of view and is for educational and informational use only. All Judicial you are advised to take your position with your sense and judgment.

 

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