Multibagger Brightcom Group shares continue to rise, up 183% from one-year low; here's why

Shares of Brightcom Group Ltd on Tuesday extended their winning run for the sixth consecutive session. The stock jumped 5 per cent to close at the upper circuit of Rs 26.19 over its previous close of Rs 24.95. The scrip reclaimed its multibagger tag during the last trading day of May this year. At today's closing price, Brightcom has rebounded 182.52 per cent from its one-year low of Rs 9.27, a level seen on April 28, 2023, when it turned into a penny stock. The counter has settled higher in eight out of nine sessions in June so far. Brightcom has gained 73.90 per cent in the past one month. Yet, it has declined 49.19 per cent in a year and 10.15 per cent on a year-to-date (YTD) basis.

In stark contrast, the scrip, which is backed by seasoned investor Shankar Sharma, has zoomed 1,183.82 per cent in the past five years. As of March 2023, Sharma owns a 1.24 per cent stake in the company.

As per the company's growth outlook, revenue is expected to be in the range of Rs 9,196.03 crore to Rs 9,667.63 crore in the financial year 2023-24 (FY24), indicating a mid-point growth of 27.51 per cent as compared to the previous fiscal. Brightcom projects profit after tax (PAT) between Rs 1,659.14 crore and Rs 1,744.23 crore in FY24, citing a mid-point growth of 24.12 per cent.

Earlier this month, the company also issued a lengthy clarification on its accounting procedures, reporting, corporate governance, and other issues. For the unversed, Brightcom is under the scanner of market regulator SEBI over concerns of irregular and incorrect filing of shareholding patterns.

"We are actively refining our reporting to ensure greater clarity and granularity to the accounting principles," the company stated in an exchange filing.

Bourses BSE and NSE have put the securities of Brightcom Group under the long-term ASM (Additional Surveillance Measure) framework. The parameters for shortlisting securities under ASM include high-low variation, client concentration, close-to-close price variation, average daily volume in a month and price-to-earnings (P/E) ratio. Exchanges put stocks in short-term or long-term ASM frameworks to caution investors about high volatility in share prices.

Aamar Deo Singh, Head of Advisory at Angel One, said, "Brightcom Group has witnessed a roller-coaster ride over the past year, with the stock at a point of time, losing almost 90 per cent of its value, to currently trade around Rs 26 levels, which is a 100 per cent plus pullback from its lows in April 2023. Certain concerns with regard to financial reporting and accounting led to this massive decline in share price. But after the company clarified that it was taking remedial measures to better its financial disclosures, there has been a respite. Investors are well advised to tread cautiously, given the overall performance of the stock in recent times."

On technical setup, support on the counter could be seen at Rs 22.10.

AR Ramachandran from Tips2trades said, "Brightcom Group stock price is bullish but also overbought. It has resistance at Rs 28.75 on the daily charts. Investors should book profits at current levels as a daily close below the support of Rs 22.10 could lead to a target of Rs 13 in the near term."

Vaishali Parekh, Vice-President - Technical Research at Prabhudas Lilladher, said, "The stock pattern is erratic. The 200-daily moving average is at around Rs 27.80 levels, while the 50-EMA (Exponential Moving Average) level is at Rs 15.30, which one can note for the important levels."

Meanwhile, Indian equity benchmarks today extended their gains for the second straight session, led by strong buying interest in consumer, metals, pharma, energy and technology stocks.

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