Synopsis: EKI Energy Services Ltd gave one of the most incredible stock market rides in recent times. It listed on April 7, 2021, at Rs. 35 and climbed to a high of Rs. 3,150 on January 24, 2022, giving investors a return of 8,900 percent in less than a year. But the surge didn’t last. Since the peak, the stock has fallen over 97 percent and is now trading at Rs. 110, wiping out almost all the gains.
About the Company
EKI Energy Services Ltd. is a leading global developer and supplier of carbon credits. It was the first company from India to list a plastic waste project under Verra, a major international certification standard based in Washington, USA. Founded in 2008 and listed on the Bombay Stock Exchange (BSE), EKI works towards a net-zero future by offering sustainable solutions for climate change and carbon offsetting.
The company provides strategic solutions to help businesses and organizations achieve their climate goals, covering carbon credit generation, supply, offsetting, asset management, carbon footprint management, sustainability audits, and initiatives for carbon neutrality and climate-positive impact.
Exponential Rise
EKI Energy Services’ rise was nothing short of meteoric. From its listing price of Rs. 35 in April 2021, the stock soared to Rs. 3,150 by January 24, 2022, giving investors a 8,900 percent return in just nine months. The rally was driven by both the company’s business performance and a booming global theme.
On the business front, EKI reported strong revenue and profits in its first year after listing, with sales of Rs. 1,800 crore and a net profit of Rs. 383 crore in March 2022. The company’s position as a global leader in the voluntary carbon credit market gave investors confidence. It captured over 20 percent of the global market, working with marquee clients such as the World Bank, Shell, and Siemens. Its projects spanned solar, wind, and clean cooking initiatives, all aligned with international climate goals and globally recognised standards.
The wider market backdrop also played a huge role. In 2021, the voluntary carbon market (VCM) quadrupled from 2020, reaching around $2 billion, driven by surging demand for nature-based solutions and higher prices for projects with environmental and social benefits, such as clean cookstoves and water purification devices. EKI, as a leading player in this fast-growing market, became a natural favourite among investors.
The voluntary carbon market (VCM) is a decentralized marketplace where companies, governments, and individuals voluntarily buy and sell carbon credits to offset their greenhouse gas emissions.
Investor enthusiasm was further fuelled by the complex and niche nature of the carbon credit business. Few understood the mechanics of the market, making the story seem almost perfect. Limited stock supply, strong demand, and momentum trading created a perfect storm, turning early investors into instant millionaires on paper. In short, the combination of a high-growth business, booming global carbon markets, and a compelling narrative about saving the planet drove EKI to the heights it reached.
Why Did The Stock Crash?
EKI Energy Services’ sharp fall was driven by a combination of business, market, and accounting issues that eroded investor confidence. The company’s board approved the removal of its statutory auditor, Walker Chandiok & Co, after concerns were raised about its financial statements.
The auditor noted that revenue and costs were not recognised consistently with accounting rules, particularly for a contract related to energy-efficient cook stoves. Although the company had received payment, the auditor stated that revenue should only be booked once the registration and verification process was complete. This created uncertainty, and investors reacted strongly to the unclear accounting.
Most of EKI’s revenue came from carbon credits, a relatively new and complex business. Initially, investors were optimistic, expecting substantial profits as global demand for carbon offsets grew. Over time, doubts emerged regarding the validity, pricing, and sustainability of demand for these credits.
Many credits, including those developed by EKI, were found to lack “additionality,” meaning they might not actually reduce emissions. As confidence in the market declined, the stock came under selling pressure.
After posting strong growth in 2022 with sales of Rs. 1,800 crore and a net profit of Rs. 383 crore, the company’s performance weakened sharply. In 2023, sales fell to Rs. 1,286 crore with a net profit of Rs. 120 crore, and by 2024, revenue dropped to Rs. 263 crore with a net loss of Rs. 129 crore. Investors who expected continued growth were surprised, which further triggered selling.
Even when reported sales were high, it was unclear how quickly the company could convert them into cash. Delays in collections raised concerns about the sustainability of operations, making investors cautious.
-Manan Gangwar
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