Mukul Agrawal stock hits a chain of 52-week lows — what's worrying investors

EKI Energy Services shares were locked in the lower circuit for a third straight day on Wednesday, after a new auditor of the climate change and carbon credit solutions provider flagged the company's accounting policy.

The EKI Energy stock — a part of ace investor Mukul Agrawal's portfolio — was frozen at a cut of Rs 70.2 or 10 per cent at Rs 632 in afternoon deals on BSE, taking its losses beyond 42 per cent in three back-to-back sessions.

EKI Energy shares hit the 20 per per cent lower circuit each on Monday and Tuesday.

EKI Energy के कमजोर नतीजे!

EKI एनर्जी में गिरावट क्यों?

2 दिन से क्यों गिर रहा है शेयर?

जानिए पूरी डिटेल्स वरुण दुबे से

#ZeeBusiness - https://t.co/d9BURxL7Fs@VarunDubey85 | #ShareMarket pic.twitter.com/V24xnOt8EZ

— Zee Business (@ZeeBusiness) February 14, 2023

What is worrying EKI Energy investors?

According to Zee Business’ senior research analyst, Varun Dubey, the steep fall in the stock could be primarily attributed to the auditor's qualified opinion questioning the company's accounting policy, along with a weak set of financial results for the quarter ended December 2022.

EKI Energy's net profit slumped to Rs 38 crore for the three-month period, as against Rs 160 crore for the corresponding quarter a year ago, and revenue shrank 41 per cent.

EKI Energy Services moved to Ind-AS accounting standards from April 2022, but did not align its policies of recognising revenue and cost with the new standards, as highlighted by the auditor, Dubey said.

Also Read: Ashish Kacholia, Mukul Mahavir Agrawal take positions in a stock that has rewarded investors with 4 times return in 2 years

Had the company applied the principles of revenue recognition under Ind AS, its revenue would have been lower by Rs 310 crore and profit by Rs 180 crore for the April-December period, according to Dubey.

The Street is also concerned about the company’s cash flow along with working capital management, he said.

Clarifying its stance, EKI Energy's management said that it is in the process of counselling senior advocates and professionals in this regard along with the customers to amend the contractual clauses.

Also Read: 192% returns in 1 year - Renowned investor Mukul Agrawal takes fresh positions in these 5 multibagger stocks

This is to "ensure the essence of the contract is brought in properly within the contract to the satisfaction of the Statutory Auditors. Relevant information and updates in this regard will be shared with all the stakeholders from time to time," EKI Energy added.

Agrawal had 4,52,389 EKI Energy shares, equivalent to 1.6 per cent of the company's equity, as of December 31, according to shareholding data available on BSE.

The celebrity investor publicly holds 56 stocks in his portfolio with a net worth of over Rs 2,771 crore as of February 15, according to stock analysis portal Trendlyne. 

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