This low price, loss-making company gains 53 per cent in just one month!

KECL is showing excellent momentum in price appreciation; one would argue that it’s normal in bull markets especially when frontline indices are making life-highs for themselves.

Kirloskar Electric Company Ltd (KECL) surged nearly 53 per cent in just one month and has become the centre of attraction for investors.  

The stock is showing excellent momentum in price appreciation; one would argue that it’s normal in bull markets especially when frontline indices are making life-highs for themselves.  

What is unique about the stock is the fact that it’s a loss-making company and even its RoE is negative. 

Trading at just over Rs 20 per share, the stock has doubled in one year; however, it’s the same stock that used to trade at Rs 40 per share, exactly five years ago.  

The current market frenzy and excess liquidity have ensured that several companies with poor fundamentals have shown strength on bourses. With KECL gaining 53 per cent in just over a month, some positive development could be in offing, which is still not in the public domain. Individual investors, however, should stay away from such counters, where there is little or no information available about the business development that may push the stock prices higher.  

On Monday, KECL closed at Rs 20.95 per share on NSE.