No Exit from the Stock That Rose 16,000%

The Economic Times - - Companies: Pursuit Of Profit -

Mum­bai: Many in­vestors are find­ing it dif­fi­cult to exit from the lit­tle-known Ahmed­abad-based pa­per com­pany Kushal Tradelink, which has been the best per­form­ing stock in the last three years. Kushal shares have been hit­ting the 2% lower cir­cuit since Jan­uary 25 af­ter BSE put it in the trade-to-trade cat­e­gory for un­usual trad­ing. The stock has pro­duced eye-pop­ping re­tur ns of 16,000% since Au­gust 2013.

The market cap­i­tal­i­sa­tion of Kushal, which­stoo­dat ₹ 45crore­onAu­gust8,2013, rose to ₹ 7,231 crore as on Jan­uary 24 this year. The stock surge went rel­a­tively un­no­ticed among the wider sec­tions of in­vestors as the com­pany is not tracked by an­a­lysts at bro­ker­ages.

The com­pany posted con­sol­i­dated net sales of ₹ 1,589 crore in 2015-16 as against ₹ 433 crore in 2014-15. In 2013-14, net sales were ₹ 302.5 crore. Net profit soared 1,420% to ₹ 98.9 crore in 2015-16 com­pared with ₹ 6.5 crore the pre­vi­ous year. The sales and profit growth, how­ever, did lit­tle to trig­ger an­a­lysts’ cu­rios­ity in the com­pa­nyamid­chat­terthatafewGu­jarat and Mum­bai-based op­er­a­tors were in-

volved in the stock’s dizzy as­cent.

Market watch­ers said these op­er­a­tors in­dulged in cir­cu­lar trad­ing to push up the share price.

“The­stock­was­com­plete satta,” said SP Tul­sian, an in­de­pen­dent eq­uity ad­vi­sor. “There is noth­ing fi­nan­cially to jus­tify the rally. Be­fore Jan­uary 24, there were buy­ers for sev­eral lakhs of shares, now sell­ing 100 is dif­fi­cult. This bares it all.”

The market is agog with spec­u­la­tion that many high-net-worth in­di­vid­u­als were lured into buy­ing the stock on the prom­ise of 2% monthly in­ter­est against as­sured investment sum in the stock.

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