A massive drop, one hit the lower circuit, and the stock of a 70,000 crore company fell -7%.:

Read, Digital Desk : If you’ve invested in artificial intelligence (AI) and technology-related stocks in recent months, Monday morning, June 29th, brought a major setback. As soon as the market opened, three major tech stocks witnessed massive selling. Crores of rupees worth of value were wiped out in a matter of minutes, and investors scrambled to book profits. Persistent Systems was the most talked-about stock. The company’s stock had closed at ₹4,841.50 in the previous trading session, but it opened at ₹4,500 on Monday morning. This meant the stock was down nearly ₹342 at market opening. Subsequent selling intensified, and within just 15 minutes, the stock plummeted to ₹4,400.50. At the time of writing, the stock was trading down nearly 7%.

Interestingly, while on a normal day, Persistent Systems typically trades around 700,000 shares, trading volume surpassed 1.5 million shares within just 15 minutes of market opening on Monday morning. This means more than double the volume compared to a normal day. This clearly indicates that there were significantly more sellers than buyers.

However, this isn’t the first time the stock has seen fluctuations. The company’s all-time high is ₹6,788.90, while its all-time low is just ₹70. Currently, the company’s market cap is around ₹70,000 crore. In terms of returns, the stock has fallen by approximately 25% in the past year. However, long-term investors have still seen good returns. The stock has risen by approximately 80% in the past three years. Looking at the company’s shareholding pattern, foreign institutional investors (FIIs) hold a 22.12% stake, while the public holds 12.7%.

The biggest reason for the decline
is believed to be the company’s largest acquisition to date. The company is set to acquire 100% of German digital engineering firm Nagarro SE for approximately 1.27 billion euros (enterprise value).

Investors’ biggest concern regarding this deal is that the entire transaction will be funded by borrowing through bridge financing provided by Barclays. Following the deal, the company’s net debt/EBITDA could reach 1.9 to 2.5 times.

Another concern is margin dilution. Nagarro’s EBIT margin is approximately 11%, while Persistent’s margin is around 16%. This means that the addition of a company with weak profits could put pressure on overall margins.

Brokerage JM Financial has also reduced its target multiple for FY28 from 34x to 30x following this deal. The brokerage clearly stated that integration risks have increased following such a large deal.

Additionally, the deal was struck at 9.1x EV/EBITDA and 1.27x EV/Revenue. Meanwhile, Persistent’s stock is already trading at a premium of nearly 30% compared to Coforge. Consequently, investors took profits, and the stock came under pressure.

Netweb Technologies also saw a stampede.
Shares of Persistent Systems and Netweb Technologies India also saw heavy selling this morning. The stock closed at Rs. 4,943.80 on Friday. It opened at Rs. 4,900 on Monday morning, but within minutes of market opening, it plummeted to Rs. 4,561.90.

At the time of writing, the stock was trading down nearly 7%. Netweb Technologies’ all-time high was Rs. 5,244, while its all-time low was Rs. 738.60.

The company’s market cap is approximately Rs. 26,000 crore. However, the picture still appears strong for long-term investors. In the past year, the stock has seen a spectacular rise of approximately 155%. Therefore, market experts believe that profit-booking after a sharp rally is not unusual.

An interesting statistic emerged here as well. While on a normal day, around 700,000 shares are traded, on Monday morning, more than 1.5 million shares were traded within just 15 minutes. The company’s public shareholding is 16.15%.

MTAR

Technologies’ stock faced the most pressure among the three companies. The stock closed at ₹7,976.50 on Friday, but opened at ₹7,621 on Monday morning. Subsequently, it fell to ₹7,578.

Heavy selling forced the stock into a 5% lower circuit. A lower circuit means that there were only sellers for the stock, and no buyers were available. In such a situation, the exchange temporarily halts trading to control excessive market volatility.

MTAR Technologies’ all-time high is ₹8,714, while its all-time low is ₹860.

The company’s market cap is approximately ₹23,000 crore. In terms of returns, the stock has gained nearly 300% in the past year, while in three years it has returned around 250%.

Foreign investment (FII) holdings in the company are approximately 17%, while public shareholding is approximately 21%.

What does doubling volume in 15 minutes indicate

Persistent Systems and Netweb Technologies recorded more than double the normal trading volume within just 15 minutes, indicating significant buying and selling as soon as the market opened. Such high volume typically indicates investors rapidly reversing their positions following news or a major trigger.

Monday morning’s trading once again demonstrated that even small news or profit-booking can cause significant declines in stocks that have seen sharp gains in recent times. Technology and AI-themed stocks, in particular, tend to be more volatile than regular stocks.

The market will now be watching how investors view the Persistent Systems Nagarro SE deal in the coming days, and whether the current decline proves to be merely profit-booking or the beginning of a larger trend. Investors will also be watching Netweb Technologies and MTAR Technologies for their next moves.