Insolvent Tayo Rolls on a roll smells of a 'pump & dump' scheme: Analysts

Mumbai: , a Tata group firm, has not generated any revenue since FY18 and is currently undergoing the corporate insolvency resolution process. That has not stopped a section of market punters from trading vigorously in its stock, which has soared nearly 230% since October 1.

In the absence of a running business operation, analysts said the trading frenzy in the stock could be part of a 'pump and dump' strategy by operators.

Tayo Rolls, which suspended its operations in May 2016, is owned by Tata Steel and Japan's Yadogawa Steel. Tata Steel owned a 54.45% stake in the company as of December 31, while Yadogawa Steel held 14.98%. Public shareholders held 26.78%,

Tayo shares, which mostly remained in a range between ₹30 and ₹50 apiece for almost three years, have seen a sudden spike since October last year amid the growing investor appetite for Tata group stocks. On Monday, Tayo shares declined 2.6% to close at ₹190.50.

"Retail investors must resist the lure of buying these types of stocks as they are not a risk worth taking," said Arun Kejriwal, CEO, KRIS Research & Advisory. "These are called pump and dump schemes, where operators manipulate prices using new marketing techniques."

Shares of another loss-making Tata Group firm, Tata Teleservices Maharashtra (TTML), were among the top performers in 2021. The stock rallied 3,000% in one year and 12,800% in two years, but the momentum has reversed of late. In the past four trading sessions, the stock has fallen 5% - the lowest tradable limit every day. About 30 million shares were on the block in the absence of buyers.

According to Tayo Rolls' annual report, the insolvency process commenced following an order passed by the Kolkata bench of the National Company Law Tribunal on April 5, 2019. In July 2019, the National Company Law Appellate Tribunal dismissed the plea by the company's employees against the ongoing insolvency process.