Shankar Sharma-owned smallcap stock rallies 75% in 12 sessions despite unfavorable Sebi order. Should you buy?

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

On the movement, technical analyst Nilesh Jain said the stock trades circuit-to-circuit and there is no specific reason for the current rally. It is best to avoid this stock, the Assistant Vice President (AVP), Equity Research Technical and Derivatives at Centrum Broking, said.

Meanwhile, analyst Manoj Dalmia, Founder and Director of Proficient Equities, said although there has been significant action in the stock, investors can avoid it as the price movements are highly volatile.

The stock has corrected from a high of Rs 112 to Rs 16.35 now, he said.

Investors still willing to take positions in the counter, can invest small amounts to take advantage of speculative moves, Dalmia recommended.

However, they should consider factors such as intense competition, market saturation, technological disruptions, and economic downturns that may impact Brightcom Group’s future performance, he cautioned.Any operational, financial, or reputational risks associated with the company should be carefully evaluated, he said.

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.

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 Rs 868.30 crore.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)