Why Brightcom Share Price is Falling

The year 2022 proved to be a turbulent year for the technology sector, as many tech darlings turned into duds, resulting in the worst year for the sector since the 2008 global financial crisis.

One such stock that suffered a significant decline was Brightcom, a tech darling that witnessed a stellar rise of 2500% in 2021 but turned into one of India's worst performers in 2022.

The ad-tech firm's stock price plummeted by over 70% in 2022, making it the worst performer in the sector. This severe beating that the company's shares took resulted in the erosion of market value worth Rs 129 billion (bn) rupees (US$ 1.6 bn).

The downturn of Brightcom's shares persisted into 2023, with a 54.3% loss in value thus far in 2023.

On 29 March 2023, the stock erased 20% of its value in a single day, reaching a fresh one-year low.

Let's find out why the group's share price took a beating.

#1 Market volatility concerns

Successive blows to the benchmark indices triggered by the Adani fallout, a contracting economy, rising interest rates, and a banking crisis has resulted in a significant market selloff.

Due to these negative global cues, even tech giants such as Infosys and Wipro have taken a hit.

This is because most IT companies in India have high exposure to the US markets, and the rising interest rates are expected to hurt the top lines earnings of companies, with economists predicting a possible US recession within the next 12 months.

Further, the collapse of these large banking institutions has also triggered a reduction in tech spending in the future, along with delayed deal closures.

These fluctuating market conditions have erased over 50% of Brightcom's value in 2023, as Brightcom Group has a one-year beta of 0.89, indicating high volatility.

#2 Promoter's account freeze

As per official information on the National Securities Depository Limited (NSDL), all Brightcom accounts were frozen from 21 November 2022 to 28 November 2022 following SEBI orders.

The action was taken after it came to light that 190 m shares of this company, held by Reddy and other company promoters, had gone missing from the shareholding pattern that was shared with stock exchanges.

According to the insider trading rules, whenever promoters sell or transfer shares, they have to inform the stock exchanges about this change of hands, giving complete details of new and old owners.

However, there was no communication carried out by Brightcom with effect this to the exchanges.

This has raised further questions about the company's management, as before this, market regulator SEBI raised concerns about the company's disclosures and financial transactions.

These management concerns have resulted in persistent selling pressure on the stock, pushing it towards the oversold region and extending its downward trajectory in 2023.

How Brightcom shares have performed recently

Brightcom shares have declined by more than 40% in a month. Over the past week, the company's shares are trading lower by 35%.

So far in 2023, shares of the company have eroded over 54%.

Brightcom touched its 52-week high of Rs 1,08.7 on 7 April 2023 while it touched a 52-week low of Rs 13.3 on 29 March 2023.

About Brightcom

Brightcom Group Limited (Formerly known as Lycos Internet Limited) is a leading global provider of comprehensive online or digital marketing services to direct marketers, brand advertisers, and marketing agencies.

The company offers digital marketing solutions to businesses, agencies, and online publishers worldwide.

Lycos Internet connects Advertisers with their audience across any form of digital Media using its massive local presence to deliver appropriate messages to the right audience through the most relevant digital channels.

It has a global presence with offices in over 24 countries.

The company is also a global information technology implementation and outsourcing services provider with an exceptional track record of providing high quality on-budget, and on-time solutions to demanding clients.

Its' business knowledge in key verticals helps to provide solutions to address the client specific needs while focusing on maximizing value of Information Technology investments.

For more details, see the Brightcom Group company fact sheet and quarterly results.

For a sector overview, read our IT sector report.

You can also compare Brightcom with its peers.

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