Why KRBL Share Price is Falling

The Indian stock markets have been on a bumpy ride as the economic realities of high inflation and slowing growth set in.

This year, Foreign Institutional Investors (FII) have liquidated equities worth over Rs 1,600 bn in the Indian market, sending the BSE Sensex Index on a turbulent ride in the past few months.

But the KRBL stock has been following a random of its own. Much like a swinging pendulum, the stock movements have been erratic as the company has been in the news for some time now.

How the stock of KRBL has performed recently

KRBL Ltd is trading at a price of Rs 221. The stock has been very volatile in the past year.

After touching Rs 298 in July 2021, the stock fell to Rs 236 only to go back up to Rs 325 in October 2021. The stock continued this volatile tread in 2022 as well.

After falling to Rs 186 in February 2022, due to disappointing results, the stock jumped back to Rs 257 in early May 2022.

This came on the back of substantial relief the company received against the impugned tax demand raised by the income tax department. The Income Tax Appellate Tribunal agreed to reduce the income tax demand of Rs 978.8 m to Rs 9.7 m on the appeal filed by the company.

However, soon after this jump, the stock fell again later in May. This time again, due to weak Q4 results.

Revenue for the quarter ending March 2022 fell 14%, as the company's sales fell both in the domestic and the international markets.

But despite weak revenue growth, the net profits shot up by 45% compared to the quarter ending December 2021.

The operating margins were also higher for the quarter ending March 2022 at 17% compared to the quarter ending December 2021 at 10%.

Although we can't say for sure, the higher margins could be an aberration due to lower raw material costs because on a one-time stock adjustment.

Moreover, there is a big red flag in the form of the company's director undergoing a trial.

Back in January 2021, the company's joint director Anoop Kumar Gupta was arrested in the money-laundering probe into the Rs 36 bn VVIP chopper scandal. Since then he had been detained and released on bail by the Directorate of Enforcement.

As per the criminal complaint filed, it's alleged that M/s Rawasi Al Khaleej General Trading LLC, had received proceeds of crime of US$ 24.62 m in the AgustaWestland case during 2008-2010. It's further alleged, the proceeds had been transferred to KRBL Limited through KRBL DMCC.

About the company

KRBL is a basmati rice producer and operates fully integrated operations in the entire basmati value chain, from seed development to branding and marketing.

While 64% of the revenues come from the Indian markets, the balance of 36% comes from the international market.

India accounts for over 70% of the world's basmati rice production, with KRBL leading the market. The company's flagship brand, India Gate, is the undisputed leader in the Basmati rice genre in India and abroad.

To know more, check out KRBL company fact sheet and quarterly results.

Also check out the top rice stocks in India.

You can also compare KRBL with its peers:

KRBL vs Ruchi Soya

KRBL vs ADF Foods

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