Mint Explainer: Why Sebi halted trading in LS Industries, Pacheli Industrial Finance
Subscribe to enjoy similar stories. For months, shares of LS Industries, a little-known textile firm with no revenue, soared inexplicably, transforming it—on paper—into one of India’s most valuable companies. Investors who ignored financial fundamentals saw their portfolios balloon.
A similar pattern played out in Pacheli Industrial Finance, a consultancy firm with negligible earnings but an outsized market valuation. Then, India’s stock market watchdog stepped in. Read this | Astronomical gains in penny stocks under Sebi lens On Tuesday, the Securities and Exchange Board of India (Sebi) halted trading in LS Industries Ltd (LSIL) after uncovering glaring discrepancies between its financial health and its skyrocketing stock price.
The move followed a similar crackdown on Pacheli Industrial Finance Ltd (PIFL), whose shares had also defied financial logic. The investigation underscores a shift in Sebi’s approach—one that goes beyond reacting to stock crashes. The regulator is now leaning on advanced surveillance tools and third-party financial data platforms to identify red flags before retail investors suffer losses.
Mint reached out to Sebi, PIFL, and LS Industries for comments on the regulator’s actions but has yet receive a response. Sebi’s probe into LSIL was triggered by a 3 February article in NDTV Profit, which pointed out that a zero-revenue company had reached a market capitalization of ₹5,500 crore. The LSIL stock had been suspended from trading by the exchanges between 30 December 2023 and July 2024 due to penal violations and non-compliance with Sebi regulations.
Read more on livemint.com
