Mishtann Foods share price hits second straight 20% lower circuit post SEBI action

The stock declined 20% to ₹9.94 per share, its lower price band limit, on the BSE (formerly Bombay Stock Exchange).

The market capitalisation of the company stands at ₹610.55 crore.

The regulator also banned Mishtann Foods from raising money from the public and barred 12 entities, including Hiteshkumar, Navinchandra Patel (CFO), Jatinbhai Patel (former full-time director), and Ravikumar Patel (former CFO), from being associated with any SEBI-registered entity or any listed firm that plans to raise funds from the public until further orders.

During the investigation period, SEBI found that Mishtann Fiids had negligible fixed assets on books and negative cash flow from operating activity. It also had very low inventory compared to its sizeable sale figures, which were prima facie found to be fictitious implicating a circular flow of funds, the market regulator said.

In its interim order, SEBI also observed that the company's shareholders increased from 516 at the end of the financial year 2017-18 (FY18) to 4.23 lakh by the end of the second quarter of FY25.

Hiteshkumar, Mishtann Foods' sole promoter, sold the company's shares during the July-August period, garnering approximately ₹50 crore. The promoter's holding has been decreasing since the March 2024 quarter, SEBI said, adding, "Thus, it appears to be waiting for an opportune time to offload his shares to the detriment of the retail investors."

The company was found to have booked fictitious sale and purchase transactions with group entities, resulting in the misappropriation of ₹47.10 crore.