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Stock manipulation: GR Cables
Why is the loss-making GR Cables generating such humungous gains and displaying extreme volatility?
 
GR Cables supposedly manufactures telecom cables. In its annual report for FY13-14, the management states that, due to non-availability of sufficient working capital facilities, it was unable to execute any business. They further mention that they are exploring various options to raise the required funds through additional equity and debt. In FY13-14, GR Cables reported revenue of just Rs4.78 lakh and a net loss of Rs30.01 lakh. In FY14-15, the Rs2-crore market-cap company reported negligible sales and a net loss of Rs27.88 lakh. It has reported a net loss in each of the past 18 quarters. Yet, over a period of about 18 months, the stock rallied 305% to Rs0.77 on 8 September 2015, from Rs0.19 on 26 February 2014. Over this period, on most occasions, there have been just one or two trades a day. Much of the gain came between 6 April 2015 and 1 June 2015. 
 
In this two-month period, the stock shot up 197%, from Re0.31 to Re0.92. By the end of June 2015, the stock declined 27%, to Rs0.67, before rallying again. Why is a loss-making company generating such humungous gains and displaying extreme volatility? Will the regulators investigate? 

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COMMENTS

Sandeep Gore

1 year ago

Hi, While this is a useful observation, hardly any retail or institutional investor will invest in such a stock where even one trade of one stock may take the stock to upper circuit. It will be very useful if you could write about small cap (say market cap above 50 or 100 Cr) and mid cap stocks.

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