CARE Ratings shares nosedive 18%; here’s why

Shares of CARE Ratings plunged as much as 18% to hit a 52-week low on Wednesday, extending its losses for the third consecutive session. The stock witnessed a surge in volume following the resignation of Ajay Mahajan as the Managing Director and Chief Executive Officer (MD & CEO) of the company due to personal reasons. Mahajan’s resignation will be effective from May 31, 2022, as per the exchange filing.

“The board of directors of the company at their meeting held today i.e. April 26, 2022, considered and accepted the resignation of Ajay Mahajan as the Managing Director and Chief Executive Officer of the Company due to personal reasons,” says the rating agency in a filing to the BSE on Tuesday night.

“Accordingly, Ajay Mahajan will be relieved from the services as the Managing Director and Chief Executive Officer of the Company effective from the close of business hours on May 31, 2022. Consequently, he shall also cease to be key managerial personnel of the company in terms of Section 203 of the Companies Act, 2013,” it adds.

Reacting to the news, CARE Ratings shares opened with a loss of ₹2.66% at 534 on the BSE, against the previous closing levels of ₹548.60. During the session, the stock declined as much as 17.97% to hit a 52-week low of ₹450 on the BSE. It touched a 52-week high of ₹791.15 on July 2, 2021.

On the volume front, there was a spurt in volume trade as 1.35 lakh shares worth ₹6.39 crore changed hands over the counter on the BSE against a two-week average volume of just 5,133 shares. The market capitalisation of the smallcap stock dropped to ₹1,391.31 crore.

The board of directors of CARE Ratings has appointed Mehul Pandya, Executive Director - Business Development, as interim Chief Executive Officer (CEO) of the company with effect from June 1, 2022.

The credit rating firm had appointed Ajay Mahajan as MD and CEO for five years, effective from April 15, 2020. Mahajan's appointment came after the company’s former chairman SB Mainak and then MD and CEO Rajesh Mokashi came under regulatory lens for allegedly influencing the firm's rating exercise.

Earlier this month, CARE Ratings informed the exchanges that the charges against Rajesh Mokashi and S.B. Mainak of interference with the rating process and influencing the ratings was not established in an enquiry conducted by a former Judge of the Supreme Court of India.