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SEBI suspended trading in Bharat Global Developers Ltd after a 10,000% stock surge, citing fraudulent disclosures and price manipulation.
The Securities and Exchange Board of India suspended trading in the shares of Ahmedabad-based Bharat Global Developers Ltd on Monday after a huge and unexplained rise in its stock price, which surged over 10,000% in a year. The market regulator moved quickly against the company, accusing it of misleading disclosures and fraudulent financial statements that inflated its stock value.
The stock price of BGDL jumped from Rs 16.14 in November 2023 to Rs 1,702.95 by November 2024. That is a 10,451% jump. The SEBI investigation discovered that the company's financials had misrepresented its true financial position. There was little revenue and no significant assets before FY23. However, in Q1 2024, the company presented the unexpected increase in revenue that carried with it negative cash flows and also considerable receivables.
SEBI discovered another suspicious issue of preferential shares in 2024. Out of the 41 allottees, 99.5% of the shares were traded at a higher price once allotted by them. Such high-value orders issued by the company, which comprises deals with big companies, like Reliance Industries, seemed to be an attempt to manipulate the price of the stock after selling major shareholdings.
Of these, 46 persons are found to be involved, and out of them, 18 have been barred from trading or otherwise dealing in the securities market. This reflects the tenacity of SEBI for bringing greater transparency and curbing market manipulation.
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