Written by Shehnaz Shaikh
December 11, 2024
Mishtann Foods, a key player in the FMCG and agri-commodities sector, is back in focus after its stock jumped 9.2% on Wednesday, reaching ₹9.78 per share on the BSE. This recovery comes amidst high trading volumes and the company’s firm rebuttal of the allegations made by the Securities and Exchange Board of India (SEBI) in a recent show-cause notice.
Background: SEBI’s Allegations
SEBI’s investigation, covering activities from April 2017 to March 2024, highlighted:
- Circular Trading: The company allegedly engaged in transactions with fictitious buyers and suppliers, many of which were shell entities controlled by Mishtann’s directors and associates.
- Promoter Share Sales: Promoter Hiteshkumar Patel reportedly offloaded shares worth ₹50 crore between July and August 2024, reducing promoter holdings.
- Public Shareholder Growth: The public shareholder base expanded sharply from 516 in FY18 to 4.23 lakh in September 2024, raising concerns about potential irregularities.
- GST and Financial Complaints: The probe was triggered by complaints of GST fraud and financial mismanagement.
SEBI has issued show-cause notices to 24 entities, including Mishtann Foods and its key officials, requiring responses within 21 days.
Mishtann Foods Responds
In an exchange filing on Tuesday, Mishtann Foods denied all allegations, calling the interim order “unsustainable in law.” The company stated:
“The prima facie view of the legal team is that the Order is unsustainable in law. Mishtann Foods Ltd. vehemently denies all allegations and insinuations in the Order.”
Mishtann emphasized that the matter is sub-judice and assured stakeholders that its business operations and growth plans remain unaffected. The company is actively seeking legal advice to challenge the SEBI order.
Stock Performance
The stock’s performance over the past few days reflects market volatility:
- December 5, 2024: Stock slumped 37% following SEBI’s show-cause notice.
- December 11, 2024: Shares recovered by 9.2%, with 14.96 crore shares traded on the BSE by 11:48 AM.
| Metric | Value |
|---|---|
| Market Capitalization | ₹1,011.88 crore |
| P/E Ratio | 97.87 times |
| EPS (Earnings Per Share) | ₹0.09 |
| Trading Range (Today) | ₹498.6 – ₹525.15 |
The BSE Sensex, by comparison, rose 0.19% during the same period, indicating significant trading interest in Mishtann Foods despite ongoing concerns.
Clarifications and Stakeholder Assurances
Mishtann Foods has taken a proactive stance, issuing clarifications to mitigate stakeholder concerns. The company stated that its:
- Business Operations: Remain unaffected by the SEBI investigation.
- Growth Plans: Continue to align with stakeholder interests and market demands.
- Legal Strategy: Steps are being taken to address the SEBI order in accordance with the law.
Implications for Investors
While Mishtann Foods’ stock recovery reflects renewed investor interest, the company remains under scrutiny for alleged financial irregularities.
Key Considerations:
- Legal Proceedings: The outcome of SEBI’s investigation will likely influence the company’s market perception.
- Volatility: The stock may remain volatile as the case progresses.
- Long-Term Prospects: Mishtann’s commitment to business continuity and growth plans could reassure stakeholders.
FAQs
1. Why did SEBI issue a show-cause notice to Mishtann Foods?
SEBI accused the company of circular trading, using shell entities to inflate financials, and mismanagement in promoter share sales.
2. How did Mishtann Foods respond to SEBI’s allegations?
The company denied all allegations, calling the interim order unsustainable and assuring stakeholders that its operations and growth plans are unaffected.
3. How is Mishtann Foods’ stock performing?
The stock recovered 9.2% on Wednesday, trading at ₹9.78 per share, with high trading volumes signaling renewed investor interest.
Final Thoughts
Mishtann Foods finds itself at a critical juncture, balancing legal challenges and market recovery. While its rebuttal of SEBI’s allegations has provided temporary relief, the company’s long-term outlook will depend on the resolution of these issues.
Stay tuned to Vista Times for more updates on Mishtann Foods and other market developments.