COVID-19: Bombay Oxygen shares up 256%; it doesn't even make oxygen

As India battles the second wave of coronavirus cases, few entrepreneurial minds seem to be on the look out for making the most of this adversity. While the second wave of COVID-19 cases began in February, reports about scarcity of hospital beds, medicines and medical oxygen started pouring in from across the country in April. Some of the stock market investors have picked up scarcity of medical oxygen as an opportunity to make quick gains.

With shortage of medical oxygen leading to price of oxygen cylinders almost doubling in some cities, investors have started picking stocks of companies manufacturing the gas to make profits. Such is the craze that investors are buying stocks of any company with 'oxygen' in their name, irrespective of whether the company is into its manufacturing or not. Bombay Oxygen Investments Ltd is one such company which has emerged as the unlikely winner in this mad rush to capitalise on oxygen scarcity.

Also read: Oxygen supply for industries to be diverted to hospitals amid growing demand

Incorporated in 1960 as Bombay Oxygen Corporation Limited, the company is a non-banking financial company which no longer manufactures oxygen. "The company's primary business was manufacturing and supplying of industrial gases which has been discontinued from 1st August, 2019. The company owns substantial financial investments in the form of shares, mutual funds & other financial securities and the income from such financial investments is the source of revenue of the company," as per the website of Bombay Oxygen.

However, the company's shares rose from a closing price of Rs 11,025 on March 31 to Rs 25,500 intra-day on Tuesday, April 20 on the BSE. This is a whopping 131.3 per cent gain in less than 12 sessions. The rally in share price is even higher if its price on February 1 is taken into consideration. The stock was trading at Rs 9,964.95 on February 1, gaining nearly 156 per cent in less than 3 months. The broader Sensex has fallen 1.84 per cent during February 1-April 20 period.

Also read: Delhi Police creates green corridor to supply oxygen to hospital with COVID-19 patients

The movement in stock price made BSE seek clarification from the company on April 8. "...we wish to inform you that all the material information/announcement that may have bearing on the operations/ performance of the company which include all the necessary disclosures in accordance with Regulation 30 of SEBI Regulations, 2015 and under insider trading regulation, have always been disclosed by the company within the stipulated time. There is no pending information or announcement which may have a bearing on the price movement of the company," Bombay Oxygen said in its reply.

As per the company's annual report for 2019-20, it received registration certificate from the Reserve Bank of India on December 31, 2019 for business of NBFC, and has no activities other than those of an investment company. Its loss during the financial year ended March 31, 2020 stood at Rs 19.72 crore.

As per its shareholding pattern for March 2021 quarter, the promoter and promoter group hold 73.29 per cent stake in the company, while the remaining 26.71 per cent stake is held by the public shareholders.

Also read: COVID second wave shaves 10% off Sensex; more downside ahead?