Shares of Brightcom Group have stayed in the 5 percent lower circuit today and were locked at a price of Rs 14. In the last 5 trading sessions, the stock has shown a downward movement of around 20 percent ranging from Rs 17.55 to the current levels.
One of the factors contributing to such movements in the stock prices is the recent Show Cause notice issued by the market regulator SEBI pertaining to certain observations in the financial statements of the company.
The company’s consolidated financial statements for FY 2020 recorded an impairment of assets of Rs 868 crores, but, no such disclosure was made in the standalone statements, indicating that the impairment is on account of the subsidiaries.
“This charge, which should have been part of the profit and loss statement rather than the balance sheet, resulted in the company understating its losses by Rs 428 crores”, the regulator said.
Brightcom Group Limited is an Indian service company engaged in providing digital marketing services as well as the development of computer software and services domestically and internationally. The company offers digital marketing solutions to businesses, online publishers, and agencies around the globe.
It provides enterprise solutions and specializes in Enterprise Resource Planning (ERP) solutions, Microsoft, and open-source systems development. The key revenue driver for the company is the ‘Digital Marketing’ Segment. Moreover, a substantial part of the revenues is generated from export sales pertaining to software and services.
Having a walkthrough of the financials, it can be observed that the company has improved its revenues and net profit numbers. Revenues moved from Rs 1,683 crores in Q2 to Rs 2,865 crores in Q3. Net profits too increased from Rs 321 crores in Q2 to Rs 544 crores in Q3.
The profitability aspects of the company seem to do well with increasing ROE and ROCE numbers. ROE shifted from 15.87 percent in FY20-21 to 21.33 percent in FY21-22. ROCE numbers took a shift from 21.56 percent during FY20-21 to 29.42 percent in FY21-22.
In addition to the above, the net profit margins have shifted upwards from 16.91 percent in FY20-21 to 18.17 percent in FY21-22. The company has been successful in consistently reducing its debt levels and finally achieved the ‘debt-free’ tag in FY20-21.
As per the quarter ending December 2022, promoters of the company hold a 18.49 percent stake. FIIs made a recent up movement as far as the stake is concerned which is from 14.01 percent during Q2 to 14.52 percent in Q3.
Written by Amit Madnani
