I have been researching about this SME for a while, and suspect possible fraud. Stock is up 44% since the last two days post earnings. Naturally I was interested to buy 1 lot of share of this Amazing company. But, post due diligence, I decided to drop that idea (maybe short it later), and raise awareness to retail investors who might be invested in this company.
What does the company do?
Provides Digital Audio/Video, Edtech, Internet services.
If you check it on screener, you will see nothing but unbelievable earnings and profit growth, and possible undervalued stonk opportunity.
Why this could be the next BCG?
Company has announced dividends since last 2 quarters but not actually paid it to many shareholders long after the record date. A simple search online regarding this, on twitter etc will reveal that angry shareholders are filing complaints and waiting for company to respond.
Management of the company, Harshawardhan Hanmant Sabale was going to invest €75 million in Malta, but backed out on the promise. The company left without paying rent, electricity and other costs of operations and left € 400K of debt.
They also made announcements of setting up “Edge” Data centers in India in 2018, but again did not actually do it. Harsh Sabale duped renowned politicians in Maharashtra in the process.
Company changed it’s name from StreamCast to Varanium Cloud just before the IPO’s. Revenue numbers have drastically shot up since then.
Concall is held, but you are required to submit questions before the call and only favorable ones get taken up.
Company has filed defamation lawsuit against people who are raising awareness on the misdeeds of the company.
This is just the tip of the iceberg, I suggest going through the expresspost, company’s twitter handles and articles related to it in detail.
In my opinion, the company is nothing short of a Fraud BPO Call center. They also employ debt recovery agents. Would love the VP community’s thoughts on this company.
I went through all the videos. To be honest, I didn’t like the attitude of the management. Although its my personal view.
I went though their annual report, couldn’t understand how do they generate revenue. Majority of it is through JumpTalk (voip). Couldn’t find the app in playstore nor in istore.
Thanks for posting this. Seems to be a complete manipulation.
Unrealistic financials, Split, Bonus, Rights - immediately after IPO appears like a scam
Shifting office to some remote location.
FY23 reported EBITDA 119 cr / PAT 85 cr
But Cash flow from Operations is only 3 cr
Even If share price multiples 100x – investors must stay away
Traders anyway doesnt bother except chart…they are free to make money in this counter
I looked at it after their quarterly results and thought the numbers are too good to be true. Upon doing further due diligence, came to the same conclusion as you that it could be a fraud. Better to stay away and lose potential returns than lose your capital.
My research and my gut tells to avoid it. To good to be true financials and valuations. But then what explains the investment by Gogri family(Aarti industries’s promotors) in this company?
If Gogri Family goes wrong, it wouldn’t affect them at all. They still can purchase all materialistic things world has to provide and retire and live luxury life.
But if we retail investors go wrong then our finances will be significantly affected.
Anyways even Shankar Sharma is invested in Brightcomm Group.
Thank you for your valuable post! I was about to invest in this co assuming good growth and cash flow in next 5 years. But due diligence and your valuable share has shown me several red flags.
Glad it helped. There’s more.
While the company is doing right’s issue, and then posting magical earnings, the Pledged shares are being dumped on retail investors.
I too have read it’s AR for 22-23 and everything seems ………… why a Company (especially IT related) need to raise Right Issue amt of 50 Cr despite having earned 90 Cr in H1 (41 + 49), as cost of capital is highest for equity.
Most IT co do buy back as they are not Capex oriented.
Heard its concall out of curiousity. (Since I had traded earlier, I knew that something was fishy until I knew around in June that what is what)
Promoter says we deserve to get to mainboard but NSE says 2 more years to go. But Investors deserve mainboard for our company.
There is some rule for 3 years for conversion, but some companies do convert. Yet for migrating due diligince is required which may bust things for them.
The only thing this promoter’s company needs is to get delisted to safeguard retail investors as well as HNI’s.
The promoter got arrested in 2009 for siphoning 14 crore
I just can’t believe how did the SME IPO went through in the first place, are there no background checks being considered just because it is bull market?
A section of the people apply for IPOs for listing gains, they have no idea about the business, let alone checking about the promoters’ past, and if there is hype surrounded with IPOs in general or with a particular IPO, this section increases. Quicker gains are hard to resist.
On a different note, it is possible that a person has committed a fraud, paid his dues, and has changed his ways, then it is up to the market t decide to trust him or not.
I am questioning the exchange which let this guy do an IPO without doing background check on the company. Even in Malta they backed out of investment and left a trail of debt.
