Authum Investment & Infrastructure - Can we believe this company?

Authum Investment & Infrastructure Ltd, a BSE listed company, had its 52 week low of Rs. 72 and High of Rs. 1,525, with stock hitting UC of 5% band, for last 3 months, with stock rising from Rs. 300 in May to current rate now, rising by over 400%. Financials of the company are not seen convincing, which can instill confidence in any prospective buyer. To narrate few of them are -

1)    Paid up equity of the company is at about Rs. 17 cr. (FV Rs. 10) as at 2-7-21, with Net worth of about Rs. 1,717 cr, giving a BV of about Rs. 1,010 per share. This net worth is after including unrealised gain not booked on listed stocks, of Rs. 1,471 cr., as stated in para 3 and 4 herein below. Strangely, Promoter converted CCD of Rs. 630 crore, into 8.45 lakh shares at Rs. 7,455 per share. Does promoter get free money? Present M cap is at Rs. 2,460 crore.

2)    Company is an investment company, with no details of listed stocks available, which was at Rs. 308 cr, of total investment, of Rs. 330 cr as at 31-3-20. This got raised to Rs. 1,625 cr on 31-3-21, but break up or details of listed investment are not available.

3)    In FY 21 company had a PAT of Rs. 135 cr, giving an EPS of Rs.  116 for FY 21. This is without booking unrealised gain on stocks of Rs. 839 cr in FY 21.

4)    In Q1 FY 22 company had a PAT of Rs. 299 cr, giving an EPS of Rs. 185 for Q1 FY 22. This is also without booking unrealised gain on stocks of Rs. 632 cr in Q1 of FY 22.

5)    In Q1 FY22, company had an income of Rs. 401 cr, with an expense of just Rs. 6 crore. Does this mean that entire income of Rs. 400 cr is via LTCG?

6)    Promoter is holding about 73.70% stake as at 2-7-21, while 3 FIIs are holding 7% and 24 investors close to promoters are holding 18, with less than 1% being held by 660 retail shareholders.

It is frustrating to see that how few investors get carried away by weak fundamentals, by merely watching rising share price, and made them desperate to buy this stock, by standing in the queue since morning, which is not even seen for having Corona Vaccine.
Such greed of small investors, tempts such promoter to play in the stock and dump to gullible investors. But even these investors are really gullible? And no one should have any sympathy for such investors, when they are bound to loose their shirt, at some point of time in future.

This is not a buy or sell recommendation, while stock recommendations are provided exclusively to our paid members in the Member Zone.