Kingfisher stock falls: What should investors do?

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Kingfisher stock falls: What should investors do?
Kingfisher Airlines stock was hit with negative sentiments after it was reported in the media that the audit firm BK Ramadhyani & Co cast its doubt that the company will not be able to maintain its solvency in the general report of the company.

The audit firm said the company has defaulted on its loans taken from banks and institutions.

The poor financial condition of the company can be measured from the fact that though Kingfisher has not deposited with the government the amount it had deducted from the employees as tax deducted at source. The company has also not deposited the amount it had deducted under the premise of provident fund contribution.


Promoters have a 58% stake in the company. Of this the promoters have already pledged more than 90% of their shares. Add to this the fact that the company has had a net loss in the last five years of operations. (Standalone figures as available on BSE). It will be a herculean task for the company to remain in profit.

The company is trying to improve its balance sheet like re-structuring debt that stands at Rs 8000 crore, this will lower its interest burden. The company's board has also approved of the plan to raise Rs 20 billion though rights issue, the date of this issue is still pending. 

VIEW: On the technical analysis front, the company's prospects are not very bright. Its share price had peaked in November 2010 and ever since then it has been on a declining trend. The volumes being traded is very low. Simple Moving Average also shows a downward movement in the stock. Considering the entire picture, investors should stay away from this stock.

For Conservative and value investors this stock shouldn't be bothered about till it gives one year of profit. DISCLAIMER: The views expressed in this article are the views of the author and do not reflect the views of our company. does not take any responsibility for any losses incurred by investors who take their cues from the above article

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