My Fourth Blog: What happened to Sintex & what can you learn from it?

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Sintex was facing financial problems before the pandemic and these problems rose in a significant manner due to low demand during 2019-20.

The company defaulted on its loans. With high debts and rising costs, the company decided to declare itself bankrupt and the business closed. Its stock went crashing down. The stock was down around 93% since 2017.


Many investors were buying this stock as it reached 52 week low. 9.1 lakh shares of Sintex Industries were traded on BSE and 52 lakh shares on NSE in one day even when the company was defaulting on its loans. A day later NSE and BSE decided to pause the trading in the stock.

Soon, Reliance announced that it will acquire the company. Its acquisition proposal was that the share capital of the company will be 0. All the investors who had Sintex shares even after its bankruptcy was announced have lost their money.

One important thing for investors to note is to analyze the financial situation of a company before investing in it. Analyzing just one metric can be dangerous.

If a stock is at a 52-week low, it is not necessarily a cheap buy. If its P/E ratio is low, it doesn’t necessarily mean it will be a value stock.👈

All these factors have to be seen together, not independently.

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