Brightcom Group shares fell, a digital marketing and technology company, has recently faced significant challenges impacting its stock performance. On June 12, the company’s stock price fell by five percent following the release of its earnings report for the quarter ending September 2024. Investors were concerned not only by the financial figures but also by the delay in announcing the subsequent quarter’s results.
Brightcom Group Shares Fell
On May 16, Brightcom Group announced its plan to declare quarterly results for the second and third quarters by June 11. However, the company only released the earnings report for the September quarter. This delay raised concerns among investors and market analysts.
The earnings report for Q2 of fiscal year 2024 showed flat revenue at Rs 112 crore. Net profit increased marginally to Rs 63 lakh, up from Rs 59 lakh in the same quarter of the previous fiscal year. However, EBITDA dropped significantly to Rs 1 crore, down from Rs 3.92 crore year-on-year. Consequently, the firm’s margin narrowed to 0.9 percent, a sharp decrease from the 3.47 percent recorded the previous year.
Market Reaction
The market reaction was swift. By 9:50 am on June 12, Brightcom Group’s shares were trading at Rs 9.88 apiece on the NSE, reflecting a five percent drop from the previous session’s close. This decline underscored the market’s dissatisfaction with the company’s performance and the delayed results.
Trading Suspension Notice
Adding to the company’s woes, on May 14, the National Stock Exchange (NSE) announced that trading in Brightcom Group shares would be suspended from June 14. The suspension will remain until the company complies with the Master Circular requirements. The circular specifies that after 15 days of suspension, trading in the non-compliant company’s securities will be allowed on a Trade for Trade basis in the Z category on the first trading day of every week for six months.
Regulatory Scrutiny
The company’s struggles are not limited to earnings and trading suspensions. In 2023, the Securities and Exchange Board of India (SEBI) conducted an investigation into Brightcom Group’s preferential issue of shares and warrants. The investigation revealed that some allottees had made only partial payments. SEBI issued an interim order on August 22, 2023. SEBI’s Whole-time Member Ashwani Bhatia suggested forwarding the order to the Enforcement Directorate (ED) for further examination due to potential violations involving foreign exchange transactions.
Relief for a Veteran Investor
In a notable development, SEBI lifted restrictions on veteran investor Shankar Sharma on February 28. This allowed him to dispose of his shares in Brightcom Group. As of March, Shankar Sharma held a 1.14 percent stake in the company. The company’s promoters held an 18.38 percent stake.
Looking Ahead
The coming months are crucial for Brightcom Group as it navigates these challenges. The company’s ability to meet regulatory requirements, improve its financial performance, and restore investor confidence will be key factors in determining its future trajectory. Investors and market watchers will closely monitor Brightcom Group as it strives to overcome these obstacles and stabilize its position in the market.