Omaxe shares hit lower circuit for third consecutive day amid SEBI restrictions

Omaxe shares at lower circuit: Shares of Omaxe, a prominent real estate firm, continued to plummet on Friday, hitting the lower circuit limit for the third consecutive session. The decline comes in the wake of the Securities and Exchange Board of India (SEBI) imposing restrictions on the company, its Chairman Rohtas Goel, Managing Director Mohit Goel, and three others, barring them from the securities market for two years due to allegations of misrepresenting the company's financials.

Omaxe's shares fell 5 per cent on Friday to Rs 139.15 on the National Stock Exchange (NSE) and Rs 137.40 on the Bombay Stock Exchange (BSE) marking third straight session in which the stock hit its lower circuit limit. Over the past three days, Omaxe's shares have declined by a cumulative 15 per cent on both exchanges.

The broader equity markets also witnessed a downturn, with the 30-share BSE Sensex dropping by 700.52 points, or 0.86 per cent, to trade at 81,167.03. The NSE Nifty similarly declined by 239.75 points to 24,771.15.

The downturn in Omaxe's share price followed SEBI's final order, issued on Tuesday, which found the company and its senior officials guilty of misrepresenting financial statements during the fiscal years 2018-19, 2019-20, and 2020-21. The allegations included misreporting revenue, debtors, advances, and expenses. SEBI has also levied a fine of Rs 47 lakh on 16 entities, including Omaxe, Rohtas Goel, Mohit Goel, and three others.

In addition to barring Omaxe and its executives from the securities market, SEBI has restricted three other individuals—Sudhangshu S. Biswal, Arun Kumar Pandey, and Vimal Gupta—from participating in the market. The regulatory body stated that these individuals and entities acted in concert to execute a fraudulent scheme, presenting the company's financial situation in a falsely positive light. SEBI's investigation revealed that the firm attempted to maintain the price of its scrip for a three-year period, despite experiencing financial losses.

In response to the order, Omaxe expressed its intent to challenge the ruling. A company spokesperson stated, "The company has not received any order from SEBI. Once received, the content will be verified and appropriate remedy available under the law, including the filing of appeal, will be contemplated." The spokesperson further added, "As per news articles, it appears more in the nature of accounting interpretations, which were duly explained through documentation, market practice, and case laws. Rest we will be filing our response to stock exchanges within the stipulated time frame, on receipt of order."

The controversy surrounding Omaxe began after SEBI received a complaint alleging that the company engaged in fraudulent transactions, diverted funds, and inflated turnover, among other accusations. Given the gravity of the allegations, SEBI initiated a forensic audit into Omaxe's affairs, covering the period from April 1, 2018, to March 31, 2021.