Infibeam suffered a loss of 71 percent in the market value of its shares, all in a single day after a viral Whatsapp message raised concerns about the company’s accounting practices.
Infibeam Avenues Ltd lost 71 percent of its market value due to a viral whatsapp message that was being circulated amongst the traders. The message had content that raised concerns about the company’s accounting practices. The 71 percent loss in the market value of the shares was registered in one single day. Speculation arose before a shareholder meeting on Saturday after a message began circulating on WhatsApp, which was attributed to brokerage Equirus Securities Pvt, said Bhavin Mehta, an analyst at Dolat Capital Market Ltd. The message was sent by an Equirus analyst to some clients, a few months ago and came up again on the messaging platform on Thursday, the sources revealed. They disagreed to reveal their name as they were unauthorized to speak on the matter.
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The record slump on Friday impelled the company to make a clarification to exchanges stating that there was no untold information or statement that may impact its share price. The WhatsApp message read that Infibeam had given interest-free and unsecured loans to its units, the people said. As of March 31, the company gave unsecured, interest-free loans worth Rs 135 crore ($18.6 million) to related firms for trade operations, as per the company’s annual report.
Abhimanyu Sofat, head of research at IIFL Securities Ltd.
Said that “The fact the shares were closely held with hardly any institutional ownership added to the weakness in the counter after the WhatsApp message.” Infibeam functions as an e-commerce platform in the business-to-business and business-to-consumer market, as stated on to its website. Equirus also had said in a different August note that the company’s e-commerce business was growing rapidly since the past 5 years, with revenues growing up to 100 percent. It also told that the company was adding 1,500 merchants every month, which was a considerable growth rate.
There have been no comments from Equirus of any kind. After approaching a number of officials regularly still there has been no response.
The stock collapsed as much as 73 percent before closing at 58.45 rupees which is 71 percent lower, on Friday in Mumbai. Its shares opened trade at Rs.180.35 and shed Rs.142.45.