Kanchi Karpooram - Another Micro Cap Wealth Destroyer?

Today we have picked one more high priced fancied stock, Kanchi Karpooram, having made its 52 week high at Rs. 1,365 on 23rd June and now ruling at Rs. 1,035, a fall of Rs. 330  in 1 week. This stock was recommended on Business Channels, by Novice Experts there, by giving rosy Q4 number expectations, which came quite disappointing, which can make share to fall in 3 digits soon. A classic case of wealth destroyer for the retail investors, who love to chase momentum on calls given by Child and Novice Experts on TV Channels. In today's time, one does not offer CUTTING CHAI free, but few gullible investors take call of these experts by both hands.   

Kanchi posted good Q3 FY21 numbers with an EPS of Rs. 58., which was extrapolated by few TV Experts, with an EPS of Rs. 80 plus for Q4 of FY21, but came in at Rs. 30. Strangely, on an EPS of Rs. 144 for FY 21, company declared a dividend of just Rs. 4 per share (FV Rs. 10), a pay out of less than 3%, which was at Rs. 3 for FY20 on an EPS of Rs. 61.Company holds cash and cash equivalent of Rs. 56 cr on 31-3-21, which was at Rs. 23 cr on 31-3-20. Infact, on 31-3-20, this Rs. 23 crore is held in Current and Fixed deposit accounts, which were not shown in bank balance head, but as cash and cash equivalents.

Company also went for buy back, in first 2 weeks of January, 2021, at Rs. 405 per share, for 2.20 lakh shares, in which Promoters did’nt participate, which also looked a fishy move. In this buy back, 10,000 shares each, by 2 shareholders were offered, of total response seen for 20,529 shares only, against buy back size of. 2.20 lakh shares. Shares were tendered at Rs. 405, when share was ruling at Rs. 500 plus, on 12th Jan 21, with offer closed on 13th Jan. This buy back seems to have been planned to give exit to few investors, who seen having bought earlier for tax planning, but luckily got an opportunity to exit in the secondary market at higher rate.    

So, nothing is really seen hunky dory in the company, to justify such high and fancied price, and indicates an operator game, which need big caution, as riding such momentum stock can be more dangerous than CORONA.

This is not a sell recommendation, while stock recommendations are provided exclusively to our paid members in the Member Zone.