The stock of a homegrown digital market company has defied gravity and has delivered massive returns of nearly 4,000% in one year. The Hyderabad-based Brightcom Group has outperformed not only equities and commodities like gold, but also the most popular cryptocurrency, Bitcoin.
Share of Brightcom Group has zoomed from ₹4.6 per share to ₹186.45 apiece over the last one year, registering an unmatched growth of 3,915%. In contrast, Bitcoin, the world’s largest cryptocurrency, surged just 104% during the same period, while the benchmark index BSE Sensex climbed 22%. The return delivered by Brightcom shares outperformed the combined gains of Sensex (22%) and Bitcoin (104%) by a factor of 31.
On Monday, Brightcom's share price opened 2.4% lower at ₹191.50 against the previous closing price of ₹196.25. Extending opening loss, the stock dropped 5% to hit its lower circuit of ₹186.45 apiece on the BSE in early trade. On the volume front, there was a spurt in selling as 1.12 lakh shares changed hands over the counter in the first hour of trade, as compared to the two-week average volume of 3.18 lakh shares. The market cap of the digital marketing company dropped to ₹19,421.25 crore.
What fueled rally in Brightcom shares?
Brightcom Group, which offers digital advertising solutions to major domestic companies such as Bharti Airtel, ICICI Bank, LIC, Maruti Suzuki, Hyundai Motors, has witnessed a strong surge in its share price over the past few years. It has climbed 64% in the last one month, 1,355% over a six-month period, and 2,576% on a year-to-date (YTD) basis. It has delivered around 9,000% return to its shareholders in the last three years and 2,800% over the five-year period.
The surge in Brightcom Group shares can be attributed to its strong earnings performance, a slew of positive developments, and expansion of the business.
Profit doubles in Q2 FY22
Brightcom Group has reported strong financial performance in the September quarter with its net profit rising 106% to ₹212.15 crore from ₹103 crore in Q2 FY21. The consolidated revenue grew 73% to ₹1,103.86 crore in Q2 FY22 as compared to ₹639.66 crore in the same period last year.
The earnings were driven by a rise in consumer usage of digital media and digital channels to conduct businesses across the world, in wake of the pandemic. Over the past 12 months, the outlook for the Adtech business has improved in light of the Covid-19 pandemic, while it is expected to remain strong in the near future.
On the demand side, the company has direct relationships with over 200 advertising agencies across the world, including Havas Digital, JWT, Mediacom, Mindshare, Neo@Ogilvy, Ogilvy One, OMD, Satchi&Satchi, TBWA, and ZenithOptimedia. Its client list contains big names like British Airways, Coca Cola, Hyundai Motors, ING, Lenovo, P&G, Qatar Airways, Samsung, Viacom, Sony, Star India, Vodafone, and Unilever.
Acquires MediaMint to expand business
The adtech company’s share price has also been boosted by the recent acquisition of Vuchi Media, operating under the brand name of MediaMint. Earlier this month, Brightcom announced the acquisition of digital marketing firm MediaMint in a cash-and-stock deal of about ₹566 crore. As per the agreement, MediaMint shareholders will get ₹360 crore in cash, ₹170 crore in Brightcom stock, and ₹36 crore will be paid within six months from completion of the deal.
Founded in 2010, MediaMint is an end-to-end digital consulting and digital operations provider specialising in advertisement operations, campaign management, creative services, data analytics, and more. It employs over 1,300 employees, servicing reputed international clients such as Pinterest, New York Times, Netflix, and Cox Automotive to name a few.
Board approve preferential allotment to Shankar Sharma
Brightcom’s share price surged nearly five-fold in the last three months after its board approved allotment of preferential shares to Shankar Sharma, vice-chairman and joint managing director at First Global. On September 16, 2021, the board of Brightcom Group approved issuing 1.50 crore warrants at ₹37.77 each (face value of ₹2 each), convertible into an equal number of equity shares, on a preferential basis to Shankar Sharma.
Besides, the company’s board also approved the allotment of 14 crore equity shares to foreign portfolio investors (FPIs) and other investors via a preferential route. The investors include Citrus Global Arbitrage Fund, Calypso Global Investment Fund, Navigator Emerging Market Fund, Connecor Investment Enterprises, and LGOF Global Opportunities, among others.