Why this Shankar Sharma portfolio stock is in focus today?

1 min read 30 May 2023, 10:42 AM IST Join us

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The stock, held by ace investor Shankar Sharma, has gained nearly 75 per cent since it hit its 52-week low of ₹9.27 on 28 April, 2023.

An equity advisor watches share prices at a financial consultants' firm in Mumbai, India, Monday, April 2, 2007. Indian shares fell sharply in early trade Monday, spooked by fresh moves from the country's central bank to tighten monetary policy and increase lending rates that could likely slow economic growth.The 30-share Sensex of the Bombay Stock Exchange plunged 394 points, 3 percent, to 12,678 points in early trading. On the broader National Stock Exchange, the 50-company S&P Nifty index fell 3.2 percent to 3,700 points. (AP Photo/Gautam Singh)

The shares of Brightcom Group gained nearly 5 per cent on Tuesday ahead of it March quarter earnings.

The stock was trading 4.95 per cent high at ₹17.81 on Tuesday. The stock, held by ace investor Shankar Sharma, has gained nearly 75 per cent since it hit its 52-week low of ₹9.27 on 28 April, 2023.

However, the stock of Brightcom has delivered multibagger returns of more than 600 per cent to investors in the last three years.

Sharma held 25,000,000 shares in the company as of March 2023 quarter, which accounted for 1.24 per cent stake.

For the quarter ended December 2022, it reported net sales at ₹2,865.17 crore in December 2022 up 41.75 per cent from ₹2,021.33 crore . Its quarterly net profit stood at ₹543.93 crore up 46.44% from ₹371.45 crore in the year ago period.

The company has business interests in ad-tech, new media and IoT and boasts of clients like Bharti Airtel, British Airways, Coca-Cola, Hyundai Motors, ICICI Bank and ITC among others.

The company is under the Securities and Exchange Board of India (Sebi) investigation for accounting irregularities. On receiving complaints about irregularities in the financial statements of the Group, the regulatory watchdog initiated an investigation into the financials from the period 2014-15 to 2019-20.

The capital markets regulator said that Brightcom overstated its profits for FY20 to the tune of ₹868.30 crore by understating expenditures by using irregular accounting practices.

Sebi found a number of deficiencies in the accounting books and other information pertaining to the company’s foreign subsidiaries. The same mainly pertained to assets impaired in FY20 to the tune of ₹868.30 crore.

“The scale of fraud is indeed large. The company attempted to camouflage accounting entries in excess of ₹1,280 crore during 2018-19 and 2019-20 to give a distorted picture of its financial position," said Sebi in its order.

Based on the probe, the markets regulator found that the accounting policy followed by Brightcom Group led to overcapitalisation of the intangible assets, which resulted in the inflation of profits.

It served a show-cause notice to the top executives of the company, including its Chairman and Managing Director Suresh Reddy.

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