Serious investors must stay away from Birla Pacific: Udayan

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Serious investors must stay away from Birla Pacific: Udayan

Birla Pacific Medspa , a Yash Birla Group Company, witnessed spectacular listing on the bourses today. However, Udayan Mukherjee says, the group is on its way to create one more penny stock. According to him, no serious investor should be even getting closer to some of these names.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » BSE | NSE 01/01/70 Are Mutual Funds betting on ?

Birla Pacific Medspa , a Yash Birla Group Company, witnessed a spectacular listing on the bourses today. However, CNBC-TV18's managing editor Udayan Mukherjee says, the group is on its way to create one more penny stock. "If we just look at the Yash Birla Group, I think it has got a habit of populating the stock market with penny stocks and rank penny stocks."

According to him, no serious investor should be even getting closer to some of these names.

Also read: Birla Pacific dazzles on debut, eyes Rs 10cr sales in FY12

Below is the transcript of his comments on CNBC-TV18. Also watch the accompanying video.

If we just look at the Yash Birla Group, I think it has got a habit of populating the stock market with penny stocks and rank penny stocks. The list is very long, Birla Cotsyn at 0.50 paise, Birla Power at 0.80 paise, Zenith Birla at Rs 7. So, I think it is in the business of just doing many of these issues and creating these penny stocks, which traders love to punt around in. I think they are probably on their way to creating one more penny stock in Birla Pacific Medspa.

First of all, I don't understand why they did an initial public offer (IPO). Last nine months reported they had seven stores, one crore odd in revenues and Rs 3 crore of losses. How can you approach the market with a one crore top-line and a Rs 3 crore loss and say, you give me money, Rs 100 crore of marketcap, so that I can grow my business? They are confusing minority investors with, maybe a venture capitalist with a seven year outlook who is going to lose money for four years and then wait and see if this business works out. So, it is in the realm of fancy. I don't know who subscribe to this issue in the first place, how it was allowed to get into the market. But I think it is on its way to creating one of those Rs 3-4 stocks, which will just create some trading excitement for the penny stock day traders. Otherwise, no serious investor should be even getting closer to some of these names.