GMM Pfaudler’s promoters put their interests first

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Editor's note: On 16 December, shares of Gujarat-based industrial equipment maker GMM Pfaudler—trading post the 2:1 bonus issue announced in July this year—fell over 14% to close at Rs 1,644. The sharp drop was a reaction to news of one of the promoters divesting their stake in the company. A similar episode happened a little over two years ago. In September 2020, in the course of two weeks, the stock slid from Rs 5,926 to Rs 3,613—a 40% drop. Then, the promoters had come out with an offer for sale of shares.  Spread 26 months apart, the two episodes are no coincidence: They happened at the exact time when the company’s stock price peaked.  In the 2020 divestment, one of the promoters sold their stake to acquire an asset that they were eventually going to give back to the company. In a tweet in September 2020, Deepak Shenoy of Capitalmind quotes the promoter as saying that their stake in GMM Pfaudler, which had come down to about 22% after the sale, would go up to 30% following the handover of the asset. …