A share which was trading at just Rs 26 80 paise on 16 December 2024 has reached Rs 78 today on 16 January. This means that in just one month this stock has lost more than 191%. In fact, for the last several days it seems to be in an upper circuit of 5%. You must be wondering which is this stock which kept touching the upper circuit despite the market fluctuations of the last few weeks. Before telling the name of this company, it is important to reiterate that just as everything that glitters is not gold, similarly not every rising stock is worth investing money in.
The name of the company we are talking about today is Pacelli Industrial Finance. Before telling the whole matter as to why this company has gone up in the eyes of SEBI, please do tell us by commenting whether you have also invested money in this share?
Strange game in the share market!
Share market is a place where some game always goes on. And retail investors get this information only after SEBI action. We want our investors to be alert, so it is important to tell about this company.
SEBI has banned Pacelli Industrial Finance and six other companies from entering the stock market. And this ban will remain in place until SEBI takes its next decision. According to the annual report, the company provides advisory services to hotels, lodging houses and many other services.
Apart from Pacelli, SEBI has come to know about the six institutions which have been banned, that they have got the benefit of preferential allotment of the company at some time or the other.
Suspicion of pump and dump
SEBI has issued an interim order on January 16 saying that the investigation has clearly indicated pump and dump in the shares of Pacelli Industrial. Pump and Dump means that the company’s shares are inflated in a fraudulent manner and then they exit by selling their shares at a higher price. In such cases, the ones who suffer the most are retail investors.
Now let us talk about the shares of Pacelli Industrial. Between December 2, 2024 and January 16, 2025, shares of Pacheli Industrial Finance have increased from Rs 21 20 paise to Rs 78 20. That means, within just one and a half months, the shares of this company gave a return of 372%. And if you know its P/E, you will be even more surprised. The P/E of Pacelli Industrial Finance share is not twenty, fifty or hundred but four lakhs. Yes, you heard it right.. 16 January 2025 i.e. today the PE of Pacelli Industrial Finance shares is four lakh five thousand six hundred and sixty-four.
castle in the air game
SEBI wholetime member Ashwini Bhatia said that the company’s management is building castles in the air. And this is a well thought out plan. According to Bhatia, at first glance it seems that this is the result of nexus of the management with the company’s auditor company GSA and Associates LLP. Therefore, these will also be investigated further.
He has clearly written in his note that in such a situation, fundamental questions arise on the role of SEBI. Because SEBI has the responsibility of protecting the interests of investors.
SEBI’s suspicion on the company’s management has increased because there is no connection between its financial reports and the movement of shares.
How much confidence in tremendous returns?
This stock has given a return of 372% between December 2024 and January 2025. Whereas it had no operating income in fiscal year 2022 and fiscal year 2023. The company said that in the fiscal year 2024, the company’s operating income was Rs 1.07 crore, which came from bad loan recovery and interest received on loans. If we look at the company’s income and share returns, its PE is above Rs 4 lakh.
SEBI’s investigation revealed that the company had taken a loan of Rs 1000 crore from six institutions. But it was not told where the loan amount would be used and its cost i.e. what is the interest on it. Later this amount was converted into shares through preferential allotment. Investigation revealed that the company diverted this money and returned it to the same six companies and did not actually take any money in exchange for the preferential shares.
Loss to small investors!
Retail investors suffer huge losses in this whole game. The lock-in period of preferential shares ends on March 11, 2025. SEBI’s whole-time member Ashwini Bhatia has stressed that it is necessary to make arrangements that these shares are not sold in the market after the end of the lock-in period. In this way, retail investors can be protected from losses.