Insider trading in LIC Housing Finance?
Moneylife Digital Team 24 July 2012

LIC Housing Finance announced subdued results, with its net profits declining 11% year-on-year on Tuesday. But why did the share price of this scam-ridden company fall severely one day in advance of the bad results? Could it be insider trading?

LIC Housing Finance Ltd (LIC HF) has reported poor first quarter results for the 2012-13 fiscal. The company has posted a decline of 11% net profit of Rs227.75 crore for the quarter ended 30 June 2012 when compared to Rs256.50 crore it recorded for the corresponding quarter last year. However, what is pertinent to note here that there was a sharp decline in its share price yesterday, one full day before the results was announced. Is there anything amiss?

On Monday, LIC HF’s share fell sharply by 4.2%, to Rs248.35, on the Bombay Stock Exchange, one day before the company was due to announce its first quarter results. It had also declined in the previous three trading sessions as well (-1.75%). However, despite lacklustre results, today LIC HF’s  stock price is up 1.1% and it closed at Rs251.05. Frenzied volumes were seen between 1pm and 2pm which pushed the stock price up.

It is also pertinent to note that the share price has trended up despite its operating profits tanking 10%, year-on-year, for the current quarter when compared to the same period last year. What is more, it is far less than its preceding three quarter y-o-y growth rates of 52%. Its net profits has also declined over the last three quarters, from Rs305 crore in December 2011 quarter to Rs 227 crore for the current quarter.

Earlier, LIC Housing Finance Ltd was involved in the Money Matters Financial Services scam, back in November 2010, when some of its officials were accused for taking kickbacks to provide loans that ran into crore, while bypassing rules and regulations. We had covered it before over here: Mystery behind the sudden rise of Money Matters stock

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