How a company becomes penny stocks

1-Corporate governance means best business practices .
Means proper corporate information disclosure to shareholders.
EXAMPLE :shilpi cable, LYCOS, pochiraju industry etc
2-Promoters mismanagement
Satyam computer
Financial tech
Amtek Auto
Ujas energy

3-Technology Change
One of The main Factor is also technology upgradation
Oil and exploration sectors
4-Increasing Debt and misallocation of that debt Conversion of Debt into Equity
Example-Guj Nre Koke
5-Misjudging of Competitor Strategy
Suppose Two companies operating in Same ind and one is using Latest Technology and other Obsolete technology
then Second One loose thier business compared to First.
6-Resignation Of KMP
Intellectual Property Is also an important part of Company.
Certain change in Directorship can destroy any company.

7-Insider Trading
One of the blot on share market is insider trading.
Tata finance was one of the old examples where promoters did insider trading.
WHICH Resulted erosion of shareholders wealth.
8- industry which much dependent on government regulation and having too much impact.
Industry like Sugar, Solar energy, Liquor, jewellery.

Author: Atul Singh Stock Market Analyst

Disclaimer: This Blog, its owner, creator / contributor is not a research analyst and expressing opinion only as an individual investor in Indian equities. He/She is not responsible for any loss arising out of any information, post or opinion appearing on this blog. Investors are advised to consult financial consultant before acting on any such information. All information in this blog is posted for personal study, All information posted on blog is as available in public domain.

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