Axita Cotton has delivered multibagger returns to its shareholders by zooming from Rs 6.5 to Rs 58 in the space of just 12 months (adjusted for FV 10 to 1 stock split).
After the massive rise in its price, the promoters began unloading stock from November 2022 onwards. Between November 21, 2022, and December 5, 2022, in just 2 weeks, the promoters offloaded 58 lakh shares (approximately). They sold out between Rs 37.50 and Rs 50 bucks, let’s say the average was about Rs 44. The total sale value worked out to about Rs 25 crores. The company’s share capital is Rs 19.6 crores as of March 2022, of which promoters held about 72.4%, or about 14 crore shares of FV 1.
As you can check from the chart below, Axita Cotton’s price started spurting after November 28, 2022.
The price rose despite the promoters’ selling. Before the promoter selling started, the daily volumes in the stock averaged about 2.5 lakh shares:
After the Axita Cotton promoters started selling, both volumes and price on the NSE shot through the roof. For example, volumes jumped from 2.57 lakhs on November 19, 2022, to 44 lakhs on December 2, 2022.
So, if retail was playing with about 2.5 lakh shares a day, there’s little chance they could have absorbed so much selling. Perhaps an HNI or a fund purchased the stock, but no disclosures have been made so far. Maybe, a disclosure will soon follow.
In the meanwhile, some Twitter influencers went ga-ga about Axita Cotton once it started moving up with volumes (which can be natural). Maybe, retail investors who followed such influencers may have jumped in, who knows?
Axita Cotton’s price hit a high of about Rs 58 on December 5, 2022, and has since reacted to about Rs 50 as of December 10, 2022.
Axita Cotton’s Fundamentals
The company reported an EPS of Rs 0.74 for the year ended March 2022. In H1 2023, the company has reported an EPS of about Rs 0.11 (FV 1, the BSE site has calculated it on FV 10).
Food the year ended march 2022, the company reported negative operating cash flows of Rs 4.3 crores.
I have brought the facts to your attention. How you interpret them depends on your analytical skills.