Friday, May 23, 2008

KGN stock makes history with Rs.100 to unbelievable Rs.55000

AHMEDABAD: "Yeh to Khwaja ki den hai." These were the first words of Mahesh Baser, senior manager (finance) of Khwaja Ghareeb Nawaz (KGN) Industries Ltd, to explain the mind-boggling re-listing of this obscure Ahmedabad company on the BSE on Wednesday.

When TOI contacted Baser at KGN's 900 sq feet office in Samudra Building off CG Road, he stuttered: "We don't know what is happening to our stock. But, investors might have found some value in the company's stock."

Khwaja Ghareeb Nawaz is a term used for the Sufi saint Moinuddin Chishty whose shrine in Ajmer has a huge following. The firm was called Royal Finance till February 2001, when it de-listed, and the name of the Ajmer saint was adopted only last year.

KGN scrip relisted at Rs 100 and then shot up to an unbelievable Rs 55,000 on Wednesday. When the exchange suspended trading on the volatile counter which closed at Rs 15,001.

The re-listing has changed the fortunes of Arif Memon, the main promoter of this castor-trading company which used to be earlier a finance company. Just two days back, his personal wealth was just Rs 12 crore, which has now shot up whopping 465 times to Rs 5,587 crore based on the closing price of Rs 5,119 of its stock on BSE on Thursday. Memon could not be contacted despite repeated attempts.

On Thursday, KGN opened four per cent down of its weighted average price of Rs 5,216.30 (as of Wednesday) and closed at Rs 5119.23, with only 1,500 shares being traded.

The company has a staff strength of just 20 employees and its marketing hinges only on five employees.

Its turnover for the quarter ended March 31, 2007 was Rs 186 crore with a net profit of only Rs 1.5 crore.

Considering Thursday's closing price, the P/E ratio of its shares is 1898 which is astounding as the average P/E ratio of Sensex is just around 20. Looking at the company's fundamentals, many analysts feel that it is quite evident that its shares prices are being manipulated.

Courtesy: timesofindia.indiatimes.com

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