Archies stock has surged over 30% in the last two days after the small-cap investor Porinju Veliyath’s company Equity Intelligence India picked up 400,000 shares of the company on Monday at Rs 29.15 per share. Archies shares are rallying amid the news of the company’s digital push and proposed shutdown of loss-making stores gaining momentum.
The share prices of Archies rose 31.55% from Rs 28.05 to Rs 36.90 in the last two days, opening for trade on Monday at Rs 29.30 and zooming 14.5% during the day to close at Rs 33.55. Today the shares opened for trading at Rs 35.60 and climbed 10% during the day to close at Rs.36.90 which pegs its market cap at Rs 124.65 crore.
Speaking to CNBC-TV18, Seshan Ranganathan, CEO, Archies said that the company is reviewing 10-20% of its about 230 stores in a turnaround effort. However, he added that the plans are not in public domain yet. He said that the company will shut down loss-making stores as part of a restructuring process. It will also revamp its website as the online business has shown strong performance in comparison to offline business.
On being asked about the dismal financial performance of the company in the recent quarters, he said that its normal for a company in the midst of a turnaround to take on extra expenses and that reflects on the financial performance too.
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For the quarter ended December 31, 2016, the company reported a net profit of Rs 0.14 crore against Rs 0.84 crore in the corresponding quarter last year. Revenue of the company increased 1.14 percent on a year-on-year basis to Rs 49.75 crore for the quarter. It had reported revenues of Rs 49.19 crore in the same quarter last year.
This attention of the management towards eliminating losses and turning the business around seems to be working as since the announcement of demonetization by Prime Minister Narendra Modi on November 8, 2016, the share price of Archies has risen 91.2% while the benchmark NSE has risen 8.11% in the same period.