Brightcom Group shares up 21% in 4 sessions; here's what technical charts indicate

Shares of troubled Brightcom Group Ltd on Wednesday continued to settle higher for the fourth straight session. The stock today rose 5 per cent to settle at its upper circuit of Rs 15.91. It has gained 21.36 per cent in four days. In terms of value, the counter saw extreme highs and lows this year. At today's closing price, the scrip has rebounded 71.63 per cent from its one-year low price of Rs 9.27, a level seen on April 28 this year when it turned into a penny stock. Despite the said rise, it has declined 63.55 per cent from its 52-week high of Rs 43.65, hit on October 11 last year.

The stock recently came under heavy selling pressure after the company's chairman and managing director (CMD) Suresh Kumar Reddy, along with chief financial officer (CFO) SL Narayana Raju, resigned following a Sebi order. For the unversed, the Securities and Exchange Board of India (Sebi) had restrained the company's top executives Reddy and Raju from holding any directorial positions.

The scrip, which was once considered multibagger, is backed by seasoned investor Shankar Sharma. It has zoomed 737.37 per cent in the past five years. As of June 2023, Sharma owns a 1.14 per cent stake in the company, slightly lower from 1.24 per cent held in the previous quarter.

Market regulator Sebi, in its order, also restricted Sharma from selling further shares in the company.

Earlier this month, Brightcom said, "The search process for a CEO and CFO has been initiated. This responsibility would be mandated to specialised executive search/consultants tasked with the selection process. Due to the intricate nature of appointing a CEO and CFO and the time it may take, the Board is actively supervising this matter."

It also mentioned that the 24th annual general meeting (AGM), originally scheduled for September 30, 2023, to present the annual report for the financial year 2022-23 (FY23), can't proceed at this juncture.

"This decision is influenced by the presence of a second interim (Sebi) order, the absence of critical individuals such as the CEO and CFO, and various technical issues hindering the finalisation of the annual report at this time. Furthermore, the Board has authorised the relevant personnel to liaise with the regulator and pertinent authorities to explore the possibility of extending the AGM within the bounds of applicable legal requirements," the company added.

On technical setup, the counter traded lower than the 5-day and 10-day simple moving averages (SMAs) but higher than the 20-day, 30-, 50-, 100-, 150-, 200-day SMAs. The counter's 14-day relative strength index (RSI) came at 35.63. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a negative price-to-equity (P/E) ratio of 177.56 against a price-to-book (P/B) value of 2.04.

The scrip has a one-year beta of 1.54, indicating high volatility.

AR Ramachandran from Tips2trades said, "Brightcom Group stock price is bouncing back from oversold levels. It faces resistance at Rs 18.83 on the daily charts. As long as daily support of Rs 14.4 is held on a closing basis, buyers can hold their position for the above-mentioned target."

Although, a few analysts pointed out that the stock pattern looked "somewhat erratic" with series of upper and lower circuits.

The group consolidates ad-tech, new media and IoT (Internet of Things) based businesses across the globe, primarily in the digital eco-system. Brightcom's consumer products division is focused on IoT. The company has a presence in the US, Israel, Latin America ME, Western Europe and Asia Pacific regions.

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