EKI Energy Services' stock loses over half of its value, down 51% in 7 sessions; here's why

Shares of EKI Energy Services lost more than half of their value on Thursday in seven consecutive sessions. The stock started falling sharply after its new auditor raised concerns over the company's financial statements. Walker Chandiok & Co allegedly cited non-compliance with accounting standards and revenue recognition norms. EKI Energy, however, refuted the allegations. "The management of the company asserts that the revenue is recognised based on the principles of substance over form, transfer of underlying asset, satisfaction of performance obligation and standalone transaction price," it said in an exchange filing.

The company is in the process of counselling senior advocates and professionals in this regard along with the customers to amend the contractual clauses so as to ensure the essence of the contract is brought in properly within the contract to the satisfaction of the statutory auditors, it added.

The scrip today crashed 10 per cent to hit a day low -- also its 52-week low and lower price band -- of Rs 568.80 over a previous close of Rs 632. In terms of stock value, EKI Energy has lost 51.15 per cent in seven days. It has declined 80.81 per cent from its one-year high of Rs 2,964, hit on July 6, 2022.

On the earnings front, EKI Energy posted a consolidated net profit of Rs 45.20 crore for the quarter that ended December 31, 2022 (Q3 FY23). Though, the exchange filing didn't provide the consolidated net profit figure for the corresponding quarter of the previous fiscal. The consolidated net profit of the company stood at Rs 106.13 crore in the previous quarter that ended September 30, 2022 (Q2 FY23). The total income stood at Rs 421.12 crore in Q3 against Rs 461.15 crore in Q2.

A total of 36,000 shares changed hands today on BSE, which was lower than the two-week average volume of 70,000 shares. Turnover on the counter stood at Rs 2.02 crore, commanding a market capitalisation (m-cap) of Rs 1,564.83 crore. There were 1,61,244 sell orders today against buy orders of nil shares.

The stock was last seen trading lower than the 5-day, 20-, 50-, 100- and 200-day moving averages. The counter's 14-day relative strength index (RSI) came at 9.59. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-book (P/B) ratio of 2.56.

EKI Energy Services has a one-year beta of 0.35, indicating low volatility on the counter.

AR Ramachandran from Tips2trades said, "EKI Energy Services stock price looks bearish with strong resistance at Rs 685. Investors should buy only if it closes above this level for targets of Rs 843-941. Support will be at Rs 498."

The company (formerly known as EnKing International) is delivering a wide range of services, in categories of training, consulting, Energy Conservation, Carbon Credit Trading, CDM and Electrical Safety Audit, Carbon Footprint measurement and management, and many more sustainability services. EKI has been working towards rehabilitating the planet to a future of net-zero carbon emissions.

Meanwhile, Indian equity benchmarks traded higher in afternoon deals, led by gains in technology and metal stocks.

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