Eki Energy stocks: Multibagger EKI Energy locked in lower circuit as new auditor flags concerns

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Mumbai: EKI Energy, a multi-bagger stock that rallied nearly 90 times within six months of listing in April 2021, locked in a 20% lower circuit Monday after its new auditor, Walker Chandiok & Co, highlighted likely non-compliance with specific accounting standards and revenue recognition norms.

EKI Energy shares ended at ₹877.75 with no buyers. The stock was listed on April 7, 2021, at ₹35 (adjusted for bonus) and hit a record high of ₹3,149.98 on January 24. It has declined 72% since then.

The company provides environmentally friendly services like carbon offset standards, carbon offsetting, renewable energy attributes and, carbon footprinting. EKI on Friday reported a 64% year-on-year decline in net profit to ₹38 crore for the December quarter and a 40.9% decrease in revenue from operations to ₹406.57 core.

While issuing a qualified report, auditor Walker Chandiok said recognition of revenues and the corresponding cost from certain customers in the quarters ended December 2022, September 2022, and nine months ended December 2022 to fulfil the underlying performance obligations is not consistent with accounting principles in Ind-AS 115.

The company did not respond to ET’s queries. In its statement to stock exchanges, EKI has defended its move on the grounds that it has recognised only the transaction price relating to project deployment as its revenue in the current period.

“Now the bigger question is whether revenue recognised in earlier years are as per Ind-AS … or not?” said Sudarshan Bhandari, an independent market analyst. “Very low cash flow conversion raises questions on the realisation of debtors and working capital management.”

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