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A Lion’s eye on the Bulls and Bears

“In India, companies may fall sick, but promoters rarely do!”

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Achtung ! Achtung ! Akruti !

Akruti City is probably the most relatively expensive real estate company in India.

 At Current Share Price of Rs 840  and an Equity of Rs 66.70 crs (Face Value of Rs 10) the Market Capitalisation is Rs 5600 crores. At March 31, 2008 the Networth was just under Rs 800 crores and Debt was Rs 626 crores. On Sales of Rs 441 crores it earned a net of Rs 295 crs registering an EPS of Rs 44. That’ s a P/E of 19… Even in the three months at June 30, 2008 the Net is Rs 171 crs… Company also pays taxes and dividends

 So what’s the Achtung ! for ?

 The Promoters, Shahs, hold a near 90% stake and sources state that there is fresh aggressive borrowing at high  24% to 30% pa interest rates pledging 200% value of the Akruti shares and Loans have shot up to around Rs 1000 crs.

 Akruti is also the only real estate stock quoting at 100% higher share price compared to a year ago.

 It’s now also in Derivative play and with a low floating stock it will be easy to manipulate and keep the listed price of the stock artificially high….. this will give added leverage to promoters to keep pledging their shares to raise finance.Reportedly Sales are also being booked for Properties pledged for Loans  

 Any guess what the endgame could be in 6 months to 1 year when the loans come up for repayment?


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