McLeod Russel has been suffering in terms of stock valuation as the company is troubled by high debt. The management announced last year about its plan to reduce debt by selling assets but the progress on that front has been slow. In the recent months, many rating agencies have reduced ratings for the company and this has led to further erosion of investor wealth.

As McLeod Russel delayed the audited yearly results, the stock suffered massively over the last one month. Investors continued selling the stock and it faced several circuits during June.

However, as the company is expected to be announced on June 29, the last two trading sessions have witnessed upper circuits. Yesterday, McLeod Russel closed 5% higher and majority of trades were executed at the higher levels.

We would suggest investors with high risk profile to watch this stock and a long term position should only be initiated after the company announces results and debt reduction numbers. The management had announced that they plan to reduce the debt to Rs 200 crore levels. The company has sold some of its tea estates but the actual realization hasn’t been announced yet.