Otokar shares plunge on lack of approval for mass production of domestic tank

Stocks of Koç Holding's Otokar plummeted nearly 10 percent on June 12 after Turkey's defense authority refused to accept the company's offer to start mass production of the main domestic battle tank Altay.

In a statement late on June 9, Otokar said its final offer to start the mass production of the Altay was found ineligible by the Undersecretary of Defense Industry (SSM), due to disagreements over some contract terms, mainly over price, adding the authority would likely meet the need through a tender.

Otokar, which developed a number of Altay prototypes, said it had submitted its final offer to the SSM to start mass production of the vehicle, in a written statement on Aug. 29, 2016.

The final offer included the mass production of 250 Altay tank units and their integrated logistic support operations, according to the statement.

In the first trading day following the June 9 announcement, the company shares took a nosedive, although some other defense companies, which have operations in defense vehicle building, saw a significant rise.

After Otokar stocks plummeted early June 12, its continuous trading was suspended and an order collection of the call auction period began, the company said June 12.

After losing value by 16.9 percent in early trading, the company shares slightly rebounded to nearly a 9.5 percent decrease at noon, Reuters reported. 

İş Yatırım investment analyst Esra Şirinel told Reuters that company shares saw steep sales after the SSM's announcement on the tanks. 

"It is not clear whether the SSM will open a tender for mass production, but this can be the case mainly for local players. This has resulted in mass purchases for stocks of Katmerciler and Tümosan. These companies,...