The Securities and Exchange Board of India (SEBI) has issued an advisory for investors regarding investments in Small and Medium Enterprises (SME) companies. SEBI has urged investors to be cautious when investing in SME companies. This advisory was released after a company from Delhi, with just two showrooms and eight employees, saw its IPO oversubscribed by 419 times. The company, named Resourceful Automobile Limited, aimed to raise ₹12 crores through its IPO but received applications worth over ₹4,800 crores.
Don’t Invest Based on Tips or Rumors: SEBI
SEBI has advised investors not to rely on social media posts or invest based on tips or rumors. After listing on the SME segment of the stock exchange, some SME companies or their promoters exaggerate their operations. These companies or promoters often make public announcements that create a positive image of their operations.
After these announcements, they may declare corporate actions such as bonus issues, stock splits, or preferential allotments. These actions create positive sentiment among investors, leading them to buy these shares. This situation allows promoters to sell their holdings at higher prices.
Recently, SEBI has issued orders against such companies, which are available on their website. Investors should be aware of these patterns when investing in such companies.
Resourceful Automobile’s IPO Oversubscribed by 419 Times
The company, whose IPO was recently oversubscribed by 419 times, was listed in the market today at the same price it offered in the IPO. The shares of Resourceful Automobile Limited were listed at ₹117, the same price at which the IPO was offered.
This company, Resourceful Automobile Limited, has only two motorcycle showrooms in Delhi and eight employees. The company aimed to raise ₹12 crores from the market but received applications worth over ₹4,800 crores for its shares.