On Wednesday morning, Memon, a businessman dealing in castor seeds and the main promoter of KGN Industries, was worth about Rs 12 crore. But soon after his company was re-listed on the BSE at Rs 100, following a seven-year suspension, the stock had hit a high of Rs 55,000. When BSE suspended trading in the scrip at 12.20 pm on Wednesday, the stock was traded at Rs 15,001.
The acronym KGN stands for Khwaja Gharib Nawaz, the 13th century sufi saint Moinuddin Chisty, whose shrine at Ajmer in Rajasthan is a pilgrimage center. Quite predictably, Mahesh Baser, a senior official at KGN’s Ahmedabad headquarter, assigned the sudden turn in fortune as the saint’s gift. “Yeh to Khwaja ki den hai,’’ Baser said when TOI tried to reach Memon at his 900-square-feet office in Samudra Building off CG Road in the city. “We don’t know what is happening to our stock. But, investors may have found some value in the company’s stock,’’ Baser added. Incidentally, BSE has already started an investigation to identify the buyers behind the meteoric rise of the stock price on Wednesday.
The firm was earlier named Royal Finance and it rechristened after the Ajmer saint last year. The re-listing has changed Memon’s fortunes, whose personal wealth has now shot up a whopping 465 times to Rs 5,587 crore based on the closing price of Rs 5,119 of KGN’s stock on BSE on Thursday. However, despite repeated attempts, Memon could not be contacted.
On Thursday, the stock opened 4% down from its Wednesday’s weighted average price of Rs 5,216 and closed at Rs 5119. Only 1,500 shares were traded. The company has a staff strength of 20 and its marketing hinges only on five employees. For the quarter ended March 31, 2007, KGN’s turnover was Rs 186 crore with a net profit of Rs 1.5 crore. Considering Thursday’s closing price, the price-to-earnings ratio for the stock was 1898. In comparison, the BSE sensex, which constitutes some of the most valuable and well-run companies in the country, has an average P/E of around 20. And analysts feel KGN’s fundamentals do not justify the stock price.
Indore firm does en core
BSE saw a near-repeat of KGN Industries’ spectacular run on Thursday when Indore-based Sylph Technology was re-listed. From a mere 80 paise in February 2002, when it was suspended from trading, its stock price on Thursday touched a high of Rs 800, before settling at Rs 179. As circuit filters do not apply on the day of re-listing, some traders and speculators seem to have had a free run in the counter. For the quarter ended March 2008, Sylph had incurred a loss of Rs 70 lakh. TNN
Sensex below 17K:
The sensex closed below the 17,000-mark, dropping 336 points, or almost 2%, to end at 16,907
Rohit
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