Investing in Vakrangee: Understanding Share Price Trends and Fundamental Performance

As of the writing of this analysis, Vakrangee's share price is trading at Rs. 55.90, in a prolonged downtrend since December 2020. This article aims to dissect the current and potential future performance of Vakrangee's shares to help investors make informed decisions over the upcoming year.

Prolonged Downtrend and Current Support

Vakrangee's share price has been in a downward trend for a significant period. Currently, it is holding around Rs. 50, which could serve as a key support level. If this level is successfully held, it may signal the beginning of a potential bull run. However, if it falls below Rs. 50, the decline might continue, reflecting the ongoing downward trend.

Quarterly Results and Market Sentiment

While the fourth quarter results did not meet expectations when compared to the same period the previous year (YoY), they did show some improvement when compared to the previous quarter (QoQ). The expectation is that the results for the next quarter will be positive. This improvement in sequential quarters could be a positive sign for Vakrangee's future performance.

Investors are holding the share, averaging their purchases each time the price falls. This approach is based on the belief that the share is in a recovering phase and will eventually bounce back. However, this is a personal view and investors should conduct their own research and analysis.

Impact of Auditor Resignations

A key factor impacting Vakrangee's share price has been the recent resignations of its auditors. On April 27, Price Waterhouse Co resigned as statutory auditors, and on May 29, Price Waterhouse Chartered Accountants resigned. These resignations occurred just days before the finalization of the annual accounts, which are unusual circumstances.

The audits are crucial for maintaining market trust and confidence in the company's financial health. The resignations, though not necessarily due to unethical behavior, have had a significant impact on the share price, which fell by as much as 67 percent in 25 trading sessions.

Industry insights and Expert Opinions

Former ICAI President Amarjit Chopra noted the unusual nature of these resignations. Price Waterhouse's resignation as the auditor after less than a year may not be surprising but the reasons for the resignations appear to be related to inadequate information. This issue has raised questions about the company's transparency and governance.

Both Price Waterhouse and Deloitte have cited inadequate information from the company's management, which contradicts or lacks the necessary explanations required for a meaningful audit. This suggests that the company's disclosures might not be sufficient.

The resignation of auditors is not always indicative of improper behavior. It can be a reflection of internal conflicts or challenges in providing the necessary information. However, investors should stay informed about such events and take them into account when making investment decisions.

Conclusion and Investment Consideration

While Vakrangee's share price has shown signs of recovery with current support at around Rs. 50, the ongoing impact of auditor resignations remains a key consideration. The share's performance is also tied to broader market sentiments and the company's ability to improve its financial disclosures.

Invest in good companies. While Vakrangee has experienced significant volatility due to recent events, it is essential to conduct thorough research and consider the long-term potential of any investment.