Business: Shut. Revenue: Zilch. Stock soars 4,800% year to date

The stock has rallied a mind-numbing 4,800 per cent year to date. It is the best performing listed name on BSE. It has hit the upper circuit limit every day for the past 74 sessions.

Problem is, the bull run on the counter seems to be a blind one. The company’s name may have ‘textile’ in it, but it would be foolish to think it is a beneficiary of the positive environment for the sector. Why, you ask? Adinath has not woven a single strand of yarn in the last two financial years.

The company used to be a textile firm, with “an installed capacity of 4.800 spindles” and state-of-the-art machinery from Italy and France. But its machinery has been gathering dust for the past two years.

“Due to no job work orders and accumulating losses, the company discontinued operations in the financial year 2019-20. Therefore, there was no revenue from operations during the financial year 2020-21,” the company management wrote in its latest annual report.

The company has not reported any revenue from operations in the last two years. Even before that, when it was running the mill, the firm recorded a top line of only around Rs 1 crore for a financial year, with the bottom line in the red.

But the company has apparently found another way to generate income.

“In order to supplement its income, the company has given its vacant factory buildings on lease for warehousing purposes,” the management said. Other income of the company, including the income from the lease, during FY21 stood at Rs 1.69 crore compared with Rs 1.39 crore reported for the previous year; a growth of 22 per cent.

So, is this growth fueling the rally in its shares? Very unlikely. No analyst tracks the stock, nor is anyone willing to talk about it. The company is yet to respond to queries sent on its official email address.

The most likely reason for the spurt in the stock price is a possible pump and dump scheme or price manipulation by a few traders to attract gullible retail investors. Though this is extremely difficult to verify.

The company is majority owned by retail investors. As per the latest available data, over 22,000 individual investors held 51.21 per cent stake in the firm. High networth investors held 1.98 per cent. There is hardly any institutional ownership.

The stock is part of the XT group, where only delivery trades can happen. Volumes remain in a few thousand transactions daily with some occasional burst when lakhs of shares change hands.

The rally is a recent trend. Throughout its existence on the bourses, the stock never traded in double digits. But now it has hit a high of Rs 83.80 as of Thursday, from Rs 1.71 at the beginning of the year.