SEBI restrains Pacheli Industrial Finance Limited from capital market access

This order confirms SEBI's interim restraint on Pacheli Industrial Finance Limited (PIFL) and six other entities from accessing the capital market, following an examination into a 372% surge in PIFL's share price that appeared inconsistent with the company's negligible reported revenues.

Who it concerns: Pacheli Industrial Finance Limited, Abhijit Trading Company Ltd, Calyx Securities Pvt. Ltd, Hibiscus Holdings Pvt. Ltd, Avail Financial Services Ltd, Edoptica Retail India Ltd, Sulphur Securities Pvt. Ltd

What SEBI found or ordered

• SEBI restrained the company and six preferential allottees from buying, selling, or dealing in securities or accessing the capital market.
• SEBI directed a detailed investigation into the matter.
• SEBI noted a 372% increase in PIFL's share price (from INR 21.02 to INR 78.2) between December 2, 2024, and January 16, 2025.
• SEBI observed that PIFL reported negligible revenues in the last three financial years, with no operating income in FY 2021-22 and FY 2022-23.
• SEBI noted the company issued 51,51,51,500 equity shares on a preferential basis to six non-promoter entities for a total value of approximately INR 850 Crore.
• SEBI found that the company did not disclose details regarding the nature, purpose, or cost of the INR 1000 crore loan that was converted into equity.

Also in the document

• The market capitalization of PIFL reached INR 4,057 Crore as of January 16, 2025, despite negligible reported revenues.
• The Price to Earnings (P/E) ratio was noted by SEBI as 4,05,664, indicating a significant disconnect between share price and fundamentals.
• Promoter shareholding in the company decreased from 29.56% in March 2019 to 0.01% in September 2024.
• The six allottees involved in the preferential issue were classified as 'Non-Promoter' entities.