Little-known stock’s 3,600% rise shows what’s wrong with India’s bull market
iStock
Synopsis
Shares of this renewable energy company have risen 3,600 per cent in the past year aided by a puny free-float of 1.1 million shares and a 10,600 per cent surge in turnover.
MUMBAI: While many have scoffed at the valuations being commanded by online food aggregator Zomato given its lack of profit track record, the Indian stock market is riddled with even worse examples that may make the fence-sitters wonder if the ongoing bull market is getting out of hand.
In the darkest alleys of Dalal Street, a different kind of bull market is unfolding that defies generally accepted logic or precedence. Here ability to corner market, low free-float and price momentum are drivers, not a story of growth or earnings prospects.
In the darkest alleys of Dalal Street, a different kind of bull market is unfolding that defies generally accepted logic or precedence. Here ability to corner market, low free-float and price momentum are drivers, not a story of growth or earnings prospects.
Gita Renewable Energy, a BSE-listed entity, is one such story.
Shares of the renewable energy company have risen 3,600 per cent in the past year aided by a puny free-float of 1.1 million shares and a 10,600 per cent surge in turnover. The stock has not dropped a paisa in 104 consecutive sessions and is on a streak of hitting its upper circuit limit in 64 straight sessions.
Such has been the demand for the stock that it has seen a down day in only three out of the past 162 sessions.
“This just shows that there are fly-by-night operators in the market taking advantage by creating stories that are in vogue,” said independent market expert Ambareesh Baliga.
“This just shows that there are fly-by-night operators in the market taking advantage by creating stories that are in vogue,” said independent market expert Ambareesh Baliga.
It is difficult to ascribe reasons to the monstrous rally seen by Gita Renewable over the past 12 months. Some would say the mere presence of the “renewable” word in the name has attracted investors given the market’s new found love for all things “green”.
Gita Renewable has not reported annual profits for the past four consecutive years, while its net sales have remained stagnant during that period. To the company’s credit, it did manage to break its streak of reporting net losses for 10 straight quarters in the previous quarter.
Gita Renewable has not reported annual profits for the past four consecutive years, while its net sales have remained stagnant during that period. To the company’s credit, it did manage to break its streak of reporting net losses for 10 straight quarters in the previous quarter.
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