You were looking for 100% gains in a year…Poof ! now you see your Principal evaporating near 100%
Kwality Limited’s Share Price has evaporated nearly 90 % from Rs 160 to Rs 21 in a year !
Blame the Brokers for going broke?
Where was the Quality in the first place !...it was clearly basking in the sunshine of the surge in the share price of other Dairy Companies like Heritage & Parag Milk
I recollect how aghast I was when Kwality Ltd was recommended strongly by not one but several well known broking houses in 2016 & 2017 when it was being quoted in the Rs 110 to 140 range.Targets given by them were extremely tempting to succumb to ! ~ one gave Rs 263 ! ~ another projected Rs 200 !
I have often mentioned this Company at my Fundamental Equity Value Vs Price Training Workshops when illustrating severe Corporate Governance Issues
A few months ago on March 27, 2018 Kwality had responded to the Exchanges on their concern of falling share price that there was no strategically significant development in the organisation or business & that they were committed to deliver sustainable value to its shareholders at all time…Wow!
The Problem perhaps was on news of Promoter Dhingra pledging shares…or the Company complaining to the exchanges that a broker was fradulently selling shares in the market .Earlier this month Kwality has also been put on the Additional Surveillance Measure (ASM) List.Their June 20,2018 Board Meeting to consider buyback and /or Bonus has been rescheduled to July 3,2018 as majority of the Directors could not make it
What’s going on here !
The Exchanges have just been notified of a downgrading of credit rating by Brickwork .It was just two months ago in April 2018 when Brickwork had given their last ratings
Today Kwality was on lower circuit at Rs 21.15 with heavy volumes before opening up to hit upper circuit & closing a little lower at Rs 22.95 on BSE…relief rally or someone finds real value now !? …52 Week High was @ Rs 160 a year ago…that’s nearly 90% wealth destroyed from a Market Cap of @ Rs 3800 crs to just above Rs 500 crs !
This is not to condemn the Broking Houses or vilify them…after all the Money & Risk is all yours…no one held a Gun to your head to invest in Kwality !…so don’t blame the brokers for going broke in this ! even if they had any vested interest in recommending the Company for Investment
Just to warn you not to be carried away by momentum & sentiment in bull markets & follow anyone blindly