Brightcom Group shares in freefall! Stock down 87% in a year as selloff intensifies; here's what analysts say

Shares of Brightcom Group Ltd have eroded more than 87 per cent of their value in the past one year. The stock has cracked around 63 per cent so far in 2023. In Tuesday's trade, the scrip tanked 5 per cent to hit its fresh 52-week low of Rs 10.80, extending its decline for the 11th straight session.

The counter was once considered a multibagger. Despite the above-mentioned plunge, the stock, which is backed by seasoned investor Shankar Sharma, has surged 386.49 per cent in the last five years. As of March 2023, Sharma owns a 1.24 per cent stake in the company.

Market regulator SEBI has issued a showcause notice to the ad-tech firm. It also flagged concerns and made observations about the irregular and incorrect filing of shareholding pattern of the company. SEBI said that the figures were not rightly reported which violated the norms.

The regulator made certain key observations, Brightcom said, which were on the impairment charges in its balance sheet for FY20 amounting to Rs 868.30 crore, shareholding pattern, compliance and reporting, among others. The company, in its response, said legal advice is sought with respect to the overall matter.

Last week, Brightcom said its promoters had pledged a part of their holdings to ICICI Bank, SBI, Canara Bank, Axis Bank and a few NBFCs back in 2013-2014, in order to collateralise the business debt.

"These financial institutions invoked the pledge and sold shares in the market, in 2014-2015 at prices between Rs 21.20 to Rs 6.40 (these are adjusted prices for all corporate actions including bonus, therefore, comparable to today's price). The total number of shares thus sold was around 5.40 crore shares on an adjusted basis," it stated in an exchange filing.

Analysts largely suggested investors avoid buying the stock. Ravi Singh, Vice-President and Head of Research at Share India, said, "Brightcom share prices may remain under selling pressure to touch the levels of Rs 5-2 in the near term. Investors are advised to exit their holdings immediately as the outlook of the stock is very uncertain."

Support on the counter could be seen at Rs 10.90, followed by Rs 7.25 levels.

AR Ramachandran from Tips2trades said, "Brightcom Group stock price now has support at Rs 10.90 on the daily charts. Till the daily resistance of Rs 16.55 is not breached on a closing basis, investors should avoid buying this stock. Next support will be at Rs 7.25."

The stock was last seen trading lower than the 5-day, 20-, 50-, 100- and 200-day moving averages. The counter's 14-day relative strength index (RSI) came at 25.88. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-equity (P/E) ratio of 438.61. It has a price-to-book (P/B) value of 1.47.

Brightcom Group has a one-year beta of 0.96, Trendlyne data showed, indicating average volatility.

The group consolidates ad-tech, new media and IoT (Internet of Things) based businesses across the globe, primarily in the digital eco-system. Brightcom's consumer products division is focused on IoT. The company has a presence in the US, Israel, Latin America ME, Western Europe and Asia Pacific regions.

Meanwhile, Indian equity benchmarks traded on a positive note in late deals today, led by gains in metals, state-owned lenders and energy stocks.

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