Brightcom Group share price is up 144% from its 52-week low; should you buy it?
Shankar Sharma's portfolio stock, Brightcom Group, has risen over 144 per cent in the last one and a half months despite being cracked down on by the Securities and Exchange Board of India for non-compliance and violating norms.
PremiumEminent investor Shankar Sharma portfolio stock Brightcom Group has been on a roll for the last one and a half months. The stock plumbed its 52-week low of ₹9.27 on April 28. Since then, it has risen over 144 per cent. This steep gain is perplexing given the fact that the market regulator Securities and Exchange Board of India (Sebi) had cracked down on the company in April through an order for non-compliance, and violating norms.
Sebi said that the Brightcom Group, headquartered in Hyderabad, had understated expenditures and overstated profits after Sebi had initiated an investigation into the financials from the period 2014-15 to 2019-20. The company, however, later clarified with the exchanges that it would be taking remedial measures to better its financial disclosures.
Read more: Brightcom Group shares locked in 5% upper circuit; What is fuelling the rally?
The stock has been highly volatile in the last few years. For example, it hit a high of ₹122.88 in intraday trade on December 24, 2021, and it is now near ₹24 which means in one and a half years, it has eroded over 80 per cent of its market value.
Meanwhile, the company reported a standalone net profit of ₹4.25 crore for Q4FY23 against a profit of ₹13.52 lakh in the same quarter last year. Revenue from operations of the company rose to ₹106.80 crore from ₹94 crore year-on-year (YoY).
According to Brightcom Group's shareholding pattern for January to March 2023, Shankar Sharma holds 2.5 crore Brightcom Group shares, which is 1.24 per cent of the total paid-up capital of the company.
What should you do?
Analysts suggest one should be cautious with these highly volatile stocks. Aamar Deo Singh, Head Advisory at Angel One pointed out that Brightcom Group has witnessed a roller-coaster ride over the past year, with the stock losing almost 80 per cent of its value and currently trading around 23 levels, which is a 100 per cent plus pullback from its lows in April 2023.
"Certain concerns with regard to financial reporting and accounting led to this massive decline in share price. But since the clarification from the company, that it was taking remedial measures to better its financial disclosures, there has been a respite to the stock. Investors are well advised to tread cautiously, given the overall performance of the stock in recent times," said Singh.
Gaurav Bissa, VP of InCred Equities observed Brightcom Group witnessed a massive correction from ₹120-odd levels and witnessed over 88 per cent retracement of the entire rise that started from 2019.
"The stock has witnessed a strong rally in the last few months and gave a breakout from the falling trendline pattern on the weekly charts. Since the stock is still in a downtrend channel after forming lower highs and lower lows, fresh buying at the current juncture is not advised. However, existing buyers can keep holding the stock with a trailing stop loss of ₹20. The stock can test the ₹28 level in the current upside in the coming weeks," said Bissa.
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Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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