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Why this stock crashed 80% in the last 1 year despite rising 345% since listing in 2016

Why this stock crashed 80% in the last 1 year despite rising 345% since listing in 2016

Why this stock crashed 80% in the last 1 year despite rising 345% since listing in 2016
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By Pranati Deva  Aug 28, 2019 4:54:15 PM IST (Updated)

Since debuting on bourses in April 2016, the stock rose 345 percent in just a little over two years, hitting its all-time high of Rs 228 per share on August 1, 2018.

Infibeam Avenues was India’s first listed e-commerce firm and became a favourite among investors soon after listing. Since debuting on bourses in April 2016, the stock rose 345 percent in just a little over two years, hitting its all-time high of Rs 228 per share on August 1, 2018.

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However, soon after the stock crashed over 70 percent in just one day, on September 29, 2018, after a WhatsApp message circulated among traders, raised concerns about the accounting policies at the company.
The WhatsApp message raised doubts about the company's accounting practices, promoters selling shares, and the company disbursing interest-free loans.
The rumour eroded Rs 9,200 crore of market capitalisation in just one day, declining to Rs 3,900 crore from Rs 13,105 crore.
Since then the stock has continued to fall, down over 80 percent in the past year and 18.5 percent in 2019 alone.
The company released a clarification post the free fall saying that there was no pending information or announcement that should hurt its share price and that no promoters were selling their stake in the company as alleged in the WhatsApp message.
Another clarification stated that the company had lent to NSI Infinium Global Pvt, the company’s subsidiary, which is not yet profitable and has a negative net worth. However, the subsidiary has shown improvement in its performance over the last two financial years.
According to the company’s 2017-18 annual report, Infibeam has given unsecured, interest-free loans of around Rs 134 crore to its wholly-owned subsidiary NSI Infinium Global Pvt. Ltd, which owns and operates the parent's flagship portal www.infibeam.com.
The company later complained to the government and the Securities and Exchange Board of India (Sebi) about the circulated WhatsApp message and asked the authorities to take steps against the same.
“Some unknown person/institution/group using the WhatsApp platform have attempted to tarnish my company, which has adversely impacted small retail investors of my company, who have paid a heavy price in terms of the erosion of share price,” Infibeam Avenues founder and CEO Vishal Mehta wrote in a letter to the market regulator.
In the June-quarter, the company reported robust profit growth of over 100 percent. It posted a 129 percent growth in its consolidated profit after tax (net profit) to Rs 28.8 crore, attributing the performance to strong transaction growth in the digital payments space. The company had reported a consolidated net profit of Rs 12.6 crore in the April-June 2018 period. Its total income from operations, however, declined 27 percent to Rs 185.5 crore in Q1 from Rs 255 crore in the year-ago period, it added.
Infibeam Avenues Limited formerly known as Infibeam Corporation Limited is India's leading ecommerce and payment solutions provider to businesses and the government. It is the only profitable and publicly-listed ecommerce company in India, which offers digital payment through CCAVenue Data Center Infrastructure and Ecommerce technology Platform via brand Buildabazaar.
The company was founded by a former Amazon executive Vishal Mehta in 2010 and was one of the youngest companies to get listed in India.
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