Penny stocks are in bad shape, after SEBI notice there was a rush to sell the shares, the price fell by 20%
The sharp decline follows a show-cause notice issued by the Securities and Exchange Board of India (SEBI). The regulator has alleged irregularities in the company’s financial dealings, including misuse and diversion of ₹100 crore through entities linked to its promoters.
Shares of Mishtann Foods saw a steep 20% decline today, December 9, hitting the lower circuit at ₹9.94 on the Bombay Stock Exchange (BSE). This marks the second instance of a lower circuit for the company in December. Over the past two trading sessions, Mishtann Foods’ share price has dropped by a staggering 36%, raising concerns among investors and market analysts.
The sharp decline follows a show-cause notice issued by the Securities and Exchange Board of India (SEBI). The regulator has alleged irregularities in the company’s financial dealings, including misuse and diversion of ₹100 crore through entities linked to its promoters.
52-Week Low: Shares Tumble to ₹9.94
After today’s decline, the stock has reached its 52-week low of ₹9.94, a significant drop from its 52-week high of ₹26.37. According to BSE data, Mishtann Foods’ share price has plummeted over 35% in the past year, eroding investor confidence.
The company’s market capitalization stood at ₹1,071.15 crore as of Monday, but the ongoing controversies have cast a shadow over its future.
The SEBI Allegations
The core issue stems from SEBI’s allegations regarding a ₹100 crore fund, which it claims has either been misused or diverted through associated entities. SEBI board member Ashwani Bhatia highlighted discrepancies in Mishtann Foods’ financial transactions, describing them as indicative of severe irregularities.
The company is accused of inflating its revenue figures through fictitious entities and fabricating sales and purchase data. Many of these entities are reportedly linked to the company’s promoters and their family members.
The notice further alleges that Mishtann Foods created non-existent entities to facilitate these transactions. Such practices are seen as a breach of corporate governance and have led to the current regulatory scrutiny.
Company’s Response
In its defense, Mishtann Foods has denied all allegations. The company stated that its legal team is preparing detailed responses to SEBI’s queries. The management has expressed confidence in resolving the issue, claiming that the accusations lack merit.
While the company works on addressing these allegations, the stock market response indicates a significant loss of trust among shareholders, making the path to recovery challenging.
Investor Caution
This situation serves as a reminder for investors to exercise due diligence before investing in companies facing regulatory scrutiny. While the final outcome of the investigation remains uncertain, it has significantly impacted Mishtann Foods’ market standing.
(This article is not investment advice. Share market investments are subject to market risks. Please consult financial advisors before making investment decisions.)
