Shares of Emkay Global Financial Services hit the 20% upper circuit on Thursday after receiving a green light from the Securities and Exchange Board of India (SEBI) for setting up its mutual fund business.
Its shares opened 6.21% higher on Thursday and continued to gain until they hit the upper circuit after gaining 19.97%. They were locked at ₹ 80.20 apiece, against their closing price of ₹ 66.85 apiece on Wednesday.
Emkay Global Financial Services provides stock broking, investment banking, depository participant services, and wealth management services.
According to an exchange filing, the company received in-principle approval from the SEBI for sponsoring a mutual fund. It has been directed by the regulator to incorporate an asset management company and a trustee company to set up its mutual fund business.
As per the regulations, it will have to sponsor at least 40 percent of the AMC’s net worth, and its net worth should not be less than 50 crores. Moreover, the company will have to fulfil the requirements as prescribed by SEBI within a period of six months, for registering successfully.
With a market capitalization of ₹ 165 crores, Emkay Global is a micro-cap company. It has an ideal return on equity of 18.45% and an ideal debt-to-equity ratio of 0.29. Its shares were trading at a price-to-earnings ratio (P/E) of 11.37 which is significantly lower than the industry P/E of 25.03, suggesting that the stock is undervalued as compared to its peers.
Written by Simran Bafna
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.