From Rs 500 To Rs 77: Is It Time To Buy This Stock?

Updated: Tuesday, May 8, 2018, 10:19 [IST]

This Vakrangee stock has had a phenomenal run in the last few years, with very little parallels. In fact, a lesser known company Vakrangee was even added in the MSCI India index, something that many companies of its size would crave for. The stock has now plummeted from Rs 500 and is presently under the lower circuit filter, with only sellers at Rs 77.

What's gone wrong with Vakrangee?

Why the fall in the Vakrangee stock from Rs 500 to Rs 77 is the obvious question. Markets will punish you relentlessly, if there is a corporate governance issue. We at GoodReturns.in have not examined the details, nor are we alleging there was corporate governance issues, unless we are certain.

From Rs 500 To Rs 77: Is It Time To Buy This Stock?

The fact is that the auditors of the company, Price Water House resigned, citing lack of clarity and information in certain areas of the business. Earlier, the company was accused of price manipulation, but SEBI investigation gave the company a clean chit. At least price manipulation is something that you can easily trace, considering that you are privy to all information regarding large volume based buying.

The management has denied any involvement and have clarified that the books of accounts are clean. They have now appointed a new auditor, who is fairly reputed.

"The financial statements present the true and fair view of the state of the affairs of the company," the company has stated in a filing.

Some facts that investors should note

One thing that investors should note that even if we assume that there could be some worry on transparency and governance, the fact to be noted is that this is a dividend paying company. From where would the money come to pay dividends? Interestingly, it has paid all its debt and is now a debt free company. From where would the money have come to pay back debt?

The company is also now engaged in a buyback of share programme. From where will the money come to buyback shares?

Also, the promoter holdings has not fallen and they would not be participating in the buyback of shares. So, this leaves some reason for optimism, at a time when there is nothing but gloom.

What Does Vakrangee do?

Vakrangee has set up the Vakrangee Kendras to provide a vast network of retail access points to deliver real-time BFSI services, Government-to-Citizen Services and Business-to-Consumer Services to the unserved rural, semi-urban and urban markets. The company plans to add many more such kendras with the passage of time.

Where will the stock go from here?

Where will the stock go from here is difficult to say. If it comes out of the lower circuit filter, it could start hitting the upper limit. This is a trend we have noticed in the past. At the moment, it remains a risky bet, unless investors get a clear picture on what is happening at the company. Of course, the stock dividend yield now nears 3 per cent and there is a buyback programme also in place.

Check stock quote of Vakrangee here

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