Stock manipulation: Source Natural
Moneylife Digital Team 01 March 2017

Source Natural, earlier known as Invinex Laboratories, was supposedly into pharmaceuticals products. It later changed its name to Source Natural Foods and Herbal Supplements Limited to manufacture foods and ayurvedic products, now in fashion. It apparently sells herbal products and supplements. On contacting the company, we learnt that it sells a product called Ojasvita, a milk powder that comes in three flavours, and another product, called Shakti drops, supposed to be some kind of energy drops to be added to water and taken as nutrients. These products are not sold directly, but can be bought through a website intriguingly called srisriayurveda.com.

 

The company claims to have sold these two products worth Rs10.93 crore in FY15-16 and made net profit worth Rs43 lakh. It has total assets of Rs6.62 crore; reserves and surplus is negative, at Rs88 lakh. In the past five years, the company has managed to achieve an average sales growth of 89.27%, but on a tiny base. In many quarters, it has either made no profits or has made a loss. Even with such strange fundamentals, the stock rose by 868%, to Rs115.25 on 21 February 2017 from Rs11.9 on 3 January 2015. The P/E is 80.84. A hot growth stock or manipulated scrip? We will never know because the regulators are somnolent. 

Comments
Sudeshna Datta
8 years ago
Dear Moneylife, You guys are doing great job to bring transparency in Indian equity markets. Thanks a lot for bringing these issues periodically. However, I beg to differ in the matter of Source Natural, equity markets work on forward looking opportunities, and Source Natural is a perfect example of that, there is a visible turnaround from last 4 quarters and looking at the success of Patanjali lot of investors believe that Source Natural also have favorable growth runway left for it. As far stock price movement is concerned, try to buy even 100 shares it will hit upper circuit as the liquidity is low. Please look at the name of the manufacturer here http://www.amazon.in/Sri-Ayurveda-Ojasvita-Chocolate-Petjar/dp/B01H77DMPS. Hope you will dig further now and see if there is merit in this scrip
naveen bachu
8 years ago
If you keep publishing without basic research you will lose credibility of Moneylife which will be u fortunate. This is a genuine sri sri Ayurveda product company - see ownership and products. Last qtr fy17q3 annualized revenue is 24 cr and Pat is 5.2 cr. Trading at 3 times sales and 16 pe for a fact company growing 100pc yoy is not expensive
Bansri Juneja
Replied to naveen bachu comment 8 years ago
1. The company itself does not claim that it sells Sri Sri product, we spoke to the company over phone and were told that these two are the only products that they make and sell. 2. The company has shown growth only in the December quarter. It was a shell/dormant company all these years. 3. The price to earnings ratio of the company is 89.09 as per current market price levels, when calculated on a trailing twelve month basis. Calculating the ratio by annualizing just one quarter will give you an incorrect picture. Similarly when one annualizes sale of just that quarter when the company has managed to do better than the previous quarters, he or she is only trying to look at the rosy picture.
naveen bachu
Replied to Bansri Juneja comment 8 years ago
1)in a fast growing company the market looks at forward 12 months if not further ahead. Value of a company comes from future earnings not past. 2)even prior to this the annual revenue was 12 cr so not a shell company.
3) goto any sri sri store and check the label on ojisatva. Made and sold by this Co. 50% of their revenue
Abhishek Kedia
8 years ago
Thanks Money life for reporting this stock. Guy on Twitter "ArunstockGuru" posted for growth and I had commented on them by tagging Sucheta Ma'am. Social Media is used for these purposes. Thanks Moneylife for reporting!
Parimal Shah
8 years ago
I think, like the government 's corrupt babus the regulator too prefers to look the other way when the culprit is running away.
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