Extending gains for the fourth day in a row, Brightcom shares were locked in the 5 percent upper circuit on June 9, with the rally translating a 20 percent growth for the stock.
At 12:45pm, the stock was quoting at Rs 23.65 on the NSE, higher by 4.8 percent from the previous close. Trading volumes at 55 million shares were more than double the 20-day average of 22 million shares.
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"We assure you that we are fully cooperating with Sebi, taking their observations seriously, and working diligently to address all the points mentioned in their show-cause notice, Brightcom said in an exchange filing on June 5.
Brightcom’s clarification was a response to a Moneycontrol report that said the company had not disclosed the financials of its subsidiaries. Following the report, Brightcom uploaded the audited financials of its material subsidiaries on its website.
The market regulator pulled up the company earlier this year for accounting irregularities and disclosure omissions. Brightcom’s asset impairment impact of Rs 868 crore was not reflected in its profit-and-loss account. Sebi said the company overstated its profits in the previous financial years.
Also Read: Shankar Sharma's 4 AM strategy, Brightcom blueprint and lessons learnt from bad bets
The sharp drop promoters' shareholding is also under the Sebi lens. In 2022, when several investors on Twitter flagged this off, Chairman and Co-founder Suresh Kumar Reddy became a partner in four LLPs - Aradhana Commosales, Sarita Commosales, Kalpana Commosales and Shailini Sales.
These LLPs were then moved from the public shareholding section to the promoter category in April 2022, which saw many retail investors tweet their discontent.
"Promoters dumped 19 percent on retail. Then, to hide they suddenly somehow without any commercial transaction, become partner in those LLPs," tweeted a user.
Brightcom shares saw a surge in retail interest back in 2021 when the stock skyrocketed from Rs 3 to Rs 117. As financial irregularities were revealed, the company lost close to 90 percent of investors' wealth in a matter of 16 months. Ace investor Shankar Sharma holds 1.25 percent in the company.
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