For Indore-based green consultancy firm EKI Energy Services, the last nine months have been nothing short of a dream run. Defying the gravity of stock price movement, the shares of EKI Energy have delivered unbelievable returns of 6,650% to its investors since its listing on the domestic exchange on April 7, 2021. The share was listed at ₹140 apiece on the SME Platform of the Bombay Stock Exchange (BSE) and surged multi-fold to hit an all-time high of ₹9,455.65 as of today.
The company, one of the largest carbon credit developers and suppliers in India, has left behind many largecap stocks with an incredible share price movement. This stellar performance can be attributed to strong business performance supported by higher demand and pricing of carbon credits. The continuous expansion of business across different geographies and industries also augured well for the company.
The stock price surged from ₹140 to ₹9,455 in 9 months
EKI Energy Services has had an incredible journey since its listing on the domestic bourse on April 7, 2021. The stock has precisely gained 6,653% over the last nine months as compared to 16.8% growth in the BSE Sensex during this period.
The stock of EKI Energy Services has given 9,170% returns as compared to its issue price of ₹102 apiece. The carbon footprint management company raised around ₹18 crore through its initial public offering at a price band ₹100-102 per equity share. The issue opened for subscription on March 24, 2021 and closed on March 26, 2021.
The stock seemed to have lost its steam in the last six months, rising 10% during the period, while it gained just 1.5% over the last one month. It has climbed 1.3% in the last five sessions.
On Thursday, EKI Energy Services hit an upper circuit of 5% at ₹9,455.65 apiece on the BSE. The stock opened higher at ₹9,450 against the previous close price ₹9,005.40. There was a spurt in volume trade as 16,000 shares changed hands over the counter, as compared to two-week average volume of 14,000 scrips. The market capitalisation of the company surged to nearly ₹6,500 crore.
Investors cheered robust business performance
The company’s strong business performance propelled investors to bet on this stock. EKI Energy Services Limited, also known as EnKing International, posted 127.3% growth in its net profit after tax (PAT) at ₹81.25 crore on a quarter-on-quarter basis during the September quarter of 2021. The profit was driven by higher demand and pricing of carbon credits and rising global awareness of greenhouse gas (GHG) emissions and widening carbon credit demand-supply gap. The total revenue jumped by 129.3% to ₹443.68 crore in Q2 FY22, against ₹193.49 crore in Q1 FY22.
For the half-year ended September 30, 2021, the net profit after tax stood at ₹117 crore against the total revenue of ₹637 crore. During H1 FY22, the company’s margins jumped to 24.6% as compared to 13.3% in FY21, supported by higher carbon pricing and effective cost control measures.
Considering the higher demand for carbon credits and a widening demand-supply gap in the global markets, the company is expected to continue strong growth momentum in the near-term future.
Focus on business expansion raises future outlook
EKI Energy Services’ strategy to expand business across the globe is one of the key drivers behind the strong rally. Earlier this month, the company incorporated an offshore wholly owned subsidiary company named Enking International FZCO in Dubai free zone. The offshore entity was established to expand the company’s presence in the global carbon market and grab the business opportunity in overseas countries. The new subsidiary, which is yet to commence operations, will carry on business in line with climate change, sustainability, and supply of offset.
Besides, the company has entered into a joint venture agreement with Shell Overseas Investments, a unit of oil major Royal Dutch Shell, to develop nature-based solutions (NBS) for carbon capture in India. As part of the agreement, Shell will invest $1.6 billion over a five-year period in the joint venture. EKI Energy will own a 51% stake in the joint venture, while Shell will hold the remaining 49% shares. The objective of the joint venture is to reduce the impact of the greenhouse gasses and provide offsets to emissions through nature-based solutions in the areas of forestry, agriculture including agroforestry, horticulture, grasslands, wetlands, blue carbon, peatlands, etc.