Concerns over recent over-pledging of shares by its promoters, and resignations of some of its key directors and executies have sent the stock price of apparel retailer Koutons' plunging by over 50% in just three trading sessions. Koutons Retail touched a 52-week low today of Rs 155.45. It slipped a further 9.99% today or Rs 17.25 to end at Rs 155.45 in a market that was up 1.5% after being locked at 20% lower circuit yesterday. There were pending sell orders of 331,367 shares, with no buyers available.
Why the share has plunged?
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Media reports of the smallcap retailer having pledged shares for the second time in almost three weeks have been doing the rounds lately. The company's promoters, who hold close to 64% stake have pledged as much as half of their stock. Some reports have also suggested that the company has been defaulting on loans, including one on a facility provided by Allahabad Bank.
The firm has also seen the exit of three directors and two senior executives, including its chief financial officer, over the last two months. The departures of the directors and the executives just ahead of the announcement of its first quarter 2010-11 numbers had raised serious concerns about the firm's financial health.
Also adding to the market buzz and its shares woes are reports of credit rating agency ICRA having suspended its ratings assigned to the smallcap retailer due to absence of required information from the company. Reports suggest that Koutons has been unable to furnish detailed financial information to ICRA, which it requires to update its rating.
The company reported an almost 50% dip in net profit to Rs 5.5 crore while net sales also declined 20% to Rs 160 crore during the first quarter ended June 2010. As on June 30, 2010 the company has an equity capital of Rs 30.55 crore.
CNBC-TV18 reports that at its Annual General Meeting, the company's board has authorized to raise funds via a GDR/QIP issue.
Peer comparison:
| Company | Last Price (Rs) | Market Cap (Rs in Cr) | Sales Turnover (Rs in Cr) | PAT (Rs in Cr) |
| Pantaloon Ret | 502.25 | 10651.3 | 5934.37 | 179.56 |
| Trent | 1055.5 | 3057.89 | 587.48 | 40.22 |
| Shoppers Stop | 673.2 | 2350.84 | 1408.06 | 50.23 |
| REI Six Ten | 80.15 | 1151.25 | 690.9 | 26.44 |
| Provogue | 67.1 | 767.34 | 359.73 | 29.46 |
| Kewal Kiran | 406.25 | 500.7 | 176.05 | 32.51 |
| Koutons Retail | 155.15 | 474 | 1206.05 | 80.24 |
| Brandhouse | 35.95 | 192.7 | 657.46 | 16.21 |
