The Securities and Exchange Board of India (SEBI) has stopped a company called LS Industries from participating in the stock market. This decision comes because LS Industries, a textile company, hasn’t made any money while its stock price went through the roof!
Imagine a company that had no revenue and yet was valued at a whopping ₹5,500 crore. SEBI took action after discovering that LS Industries was involved in some shady dealings with its stock prices. It issued a temporary order to freeze trading of LS Industries shares, affecting its promoters and key people involved.
In an even stranger twist, an NRI investor named Jahangir Panikkaveettil Perumbarambathu (or JPP for short) purchased LS Industries shares for just ₹75 (around $1) and watched their value shoot up to ₹2,752 crore at one point! But he also faced trouble, as SEBI is investigating him for potential rules violations.
LS Industries’ stock shot up dramatically from ₹22.50 in July 2024 to ₹267.50 in September 2024 before plummeting back down to ₹42.39 by November. SEBI found this hard to believe, saying it’s odd for a company with zero sales to be valued so high.
The company’s jump in stock price caught everyone’s attention, except for those wiser investors who know better than to be lured by quick cash—much like the children following the Pied Piper in fairy tales. SEBI warned everyone to be cautious and think carefully before investing.
The investigation also uncovered possible dishonest trading activities by groups of traders that manipulated the stock price. SEBI noted that some individuals might have sold shares at high prices right before the stock took a fall.
Even after declaring a shift to new fields like artificial intelligence, SEBI noticed that some insiders were trading shares, which raised more red flags about their honesty.
So far, SEBI stated that LS Industries and those involved must provide their side of the story within 21 days. The regulator’s investigation is expected to wrap up by May 2025, but for now, LS Industries will stay out of the capital markets.
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