Erratic price movement patterns in the absence of triggers Some stocks need no trigger to move either way. The Mumbai-based trading firm Shree Global Tradefin is one such stock. The scrip has been on a sustained uptrend since the onset of the 2008 on momentum buying. It advanced a whopping 1293.34% from Rs 22.55 on 4 Januaiy 2008 to Rs 314.20 on 10 September2008. The rise was despite the absence of any trig-gers. The company’s financials do not look encouraging either. However, volumes on the counter were thin, with the stock remaining locked at the 5% upper circuit filter in 53 out of the 67 trading sessions.
The unabated rally in the Shree Global Tradefin stock was punctuated by alternate spells of rise and fall in volatile trade. It rose 11.14% and declined 37.79% and 11.48% to Rs 258 in the month, quarter and a year to 25 March 2010. The scrip struck a record high of Rs 474 on 26 November 2009 and a 52-week low of Rs 195 on 18 August2009.
Normally, a stock with erratic movements in a short span is put under the T group as part of surveillance to protect investors. In the T group, delivery is compulsory, thereby warding off speculation. Despite the reverberations, the Shree Global Tradefin stock continues to be traded in the B group on the BSE. It is not traded on the NSE. The counter clocked an average daily traded volume of 83,525 shares a day in the week to 26 March 2010 compared with 39,601 shares a day in the past year.
Shree Global Tradefm trades steel products including hot rolled coils, cold rolled steel sheets, MS channels, MS angles, hot rolled plates, and MS beams. Promoters’ ownership was pegged at 74.87% end December2009.
Based on the latest price of Rs 222.25 on 26 March 2010, Shree Global Tradefin commands an astronomical P/E multiple of 1852.08 based on its trailing 12-month EPS of Rs 0.12. This is abnormal when compared with an industry average of 28.28 for small/medium trading firms. Moreover, the company is yet to reward equity shareholders with dividend and bonus. Also, the book value, or the value of assets, was too low at Rs 10.59 per share.
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