Front Running and Swan Energy Ltd (Rs.192.15)

Accumulate the stocks from distress selling....

Front-running is an illegal and unethical practice where someone trades in shares based on advance information from a broker, dealer, analyst, or other executive at a market intermediary in their personal accounts, before the trades are executed by that entity.  Photo: The Hindu BusinessLine.

After the name of Swan Energy Ltd, got entangled with Quant Mutual Fund, selling has been witnessed in the counter, especially yesterday when it fell more than 4% in intraday trade, closing near the days low. 

It is to be noted that around 100 stocks out of the basket consisting of 178 that are part of the portfolio of Quant Mutual Fund ended lower, post Moneycontrol's report on Sunday that mentioned SEBI's search and seizure operations on the premises of the fund house. The operation was conducted across two locations – Mumbai and Hyderabad. Quant Mutual Fund is owned by Sandeep Tandon, with assets under management close to Rs.90,000 crore.

It is pertinent to mention here that Quant Mutual Fund has been a top performer, growing its AUM significantly from Rs.258 crore in January 2020 to over Rs.90,000 crore by June 2024. 

However, selling in the counters of Swan Energy Ltd is just a MISNOMER, since allegations of front running is on the fund house and has nothing to do with individual stocks; except creating a negative sentiment on future performance (of the stocks in its portfolio); leading to forced redemptions by the investors -- means there could be sudden increase in supply of the shares of Swan Energy Ltd. 

The prudent investors should therefore accumulate the panic - selling - stocks by the investors of Quant Fund.

Meanwhile, according to Trenlyne, in May 2024, 27 mutual funds bought while only 4 mutual funds sold Swan Energy Ltd, resulting in a net change of 193,576 shares. 

Kirtan Shah from Credence Wealth Advisors LLP noted that Quant MF holds substantial investments in large-cap stocks, with significant exposure to Reliance. He mentioned that liquidity for redemptions isn't a concern but anticipated potential selling in mid and small-cap stocks held by Quant, possibly leading to short-term underperformance.

You need to accumulate, since a major event like RELISTING of the shares of Reliance Naval and Engineering Ltd (RNEL) will take place very soon. Post Listing Swan Energy Ltd will get the tag of Defence Stock, since according to my sources, RNEL has a high probability of getting contract for making WAR SHIPS.

Another major factor fueling the positive sentiment around Swan Energy Limited is its recent success in obtaining a significant order from the Karnataka government. 

The company will be installing India's second-largest solar plant, a pioneering project that highlights Swan Energy’s dedication to sustainable energy solutions. This initiative aligns seamlessly with the Indian government’s ambitious renewable energy targets and is anticipated to greatly enhance the company’s long-term growth.

About Swan Energy Ltd:

Swan Energy Limited, based in Mumbai, Maharashtra, is a global company with a long history dating back to 1909. Owned and managed by the Dave and Merchant families, it operates in three main areas:

Textile: Swan Energy produces and sells cotton and polyester textiles. It has a modern fabric processing plant in Ahmedabad, capable of handling 100,000 meters per day.

Real Estate: This segment focuses on developing and managing residential and commercial properties. The company is known for its high-quality construction and has completed over 24 million square feet of projects.

Energy: Swan Energy plays a crucial role in India’s energy sector with its 5 MMTPA FSRU-based LNG terminal in Jafrabad, Gujarat, the first of its kind in the country.

The company is known for its quality products and services and is always looking for growth and innovation opportunities. 

Some of its notable achievements include the 2018 commissioning of the Jafrabad LNG terminal, winning the “Best Energy Company” award at the CNBC-TV18 India Business Leaders Awards in 2020, and being ranked 10th on Forbes India’s Most Valuable Private Companies list in 2021.

As Swan Energy continues to grow and achieve milestones, it remains a significant player in India’s industrial sector. With a strong focus on renewable energy, the company is well-positioned for a bright future that aligns with India’s energy goals.

Investors and stakeholders are keenly watching its progress, expecting substantial returns in the coming years.