Is Brightcom a shooting star?

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Editor's note: On 28 February, Hyderabad-based digital marketing solutions company Brightcom Group made a startling revelation. It said it had received a notice from the Securities and Exchange Board of India five months ago, intimating it of a forensic audit of its books. SEBI’s notice was received on 16 September 2021, a day before the company announced that it was going to raise over Rs 500 crore through a preferential allotment of warrants. Starting June 2021, until the day the company made the disclosure to stock exchanges, Brightcom’s shares performed spectacularly even as investors were in the dark about the SEBI order. Between June and December, they jumped over 2,000%, compared to a 15% gain in the BSE small cap index. In the same period, the company’s market capitalization went from Rs 500 crore to over Rs 23,200 crore (when the stock hit its pre-bonus peak of Rs 223 in December 2021). Besides the fresh warrants, the two bonus issues in quick succession—in August 2021 and again in January 2022—helped fuel the rally. Disclosure of the audit of its financials between 2014-15 …