Investors in panic mode as Crompton Greaves' stock price tanks - Can the new CEO save the day?

CEO succession is a pivotal moment in the life of any company. If you doubt the importance of this event, let me provide you with a real-life example that will resonate with avid cricket fans. 

Do you recall when the IPL franchise of Chennai Super Kings transferred the captain hat from MS Dhoni to Ravindra Jadeja? Although Jadeja is a quality player with a skyrocketing arm and the ability to hit the stumps, the team suffered. Mid-way through the season, Dhoni returned as captain. This exemplifies that leadership quality is not everyone's cup of tea. 

Why the panic? 

A similar panic was witnessed in the stock of Crompton Greaves Consumer Electricals Ltd as market participants showed little excitement about the announcement of the newly appointed CEO. This was evident in the stock's sharp decline of 14% on an intraday basis, hitting a 52-week low at Rs 252.35 apiece. It recorded its sharpest single-day decline in over three years since the latter part of March 2020. 

Interestingly, the fall was accompanied by robust volume, with the volume recorded so far for the day on NSE being about 208 lakh shares. This is significantly higher than the 10 and 20-day average volume of 35.37 lakh and 26.46 lakh shares, respectively. 

In a recent press release, the company mentioned that it has appointed Promeet Ghosh as CEO and MD, with effect from May 1, 2023, after Mathew Job resigned as CEO on April 23, 2023. 

Who is Promeet Ghosh? 

Here is a brief profile of Promeet Ghosh. He is a graduate in Engineering (Electrical & Electronics) from the National Institute of Technology, Trichy and an MBA from the Indian Institute of Management, Calcutta. He was an investment banker for two decades and has served as a director on boards of various companies across sectors. 

Technical analysis 

From a technical standpoint, the stock is trading below its key long-term and short-term moving averages, and they are trending downwards. The relative strength index stands at 24.25, indicating that the stock is oversold. 

In conclusion, CEO succession is a critical event that can impact a company's stock price significantly. It is important to understand the implications of such changes and monitor them closely, as they can have far-reaching consequences.