By 2025, the global energy drinks sector is expected to have grown in valuation to $85 billion. This will constitute both of cannabis-infused, alcoholic and non-alcoholic drinks with the latter taking up the largest share. However, cannabis-infused drinks are expected to have between $25 – $30 billion portion of this, a significant market size for any industry.
It thus comes as no surprise that most industry players are working tirelessly to venture into this market. Global dominants such as Constellation Brands (NYSE:STZ) have been at the forefront of this venture and have thus attracted other players into the same. One of the companies which seem to have been attracted the most is India Globalization Capital Inc (OTCMKTS:IGCC).
The firm has a wide portfolio of assets within the infrastructure business. Recently, however, they have opted to widen this with a venture into the cannabis sector. The firm has invested considerable resources in the development of cannabis-infused drinks as well as their flagship medical product which will see them provide solutions to individuals suffering from Alzheimer. As a result, their entry into the segment was expected to have had significant implications on their valuation through higher pricing of their shares.
This was hampered by their delisting from the New York Securities Exchange as the trading of their shares was suspended – further details are provided later in this piece.
Earlier this week, therefore, the firm opted to list on the OTC market. Here, they hit the market running as their share rose immediately after the listing and did not stop climbing. The firm’s share price began Tuesday at $.5 only to close the next day at highs of $1.84, a 168% increase in price. However, the price later experienced a correction on Thursday and closed the day at $1.33. Over this period, the number of shares traded has averaged over 5.5 million shares daily.
Readers can view the above in the chart below:
Given all the above, we opted to look into each factor discussed in the above segment and evaluate how it impacts the firm’s short and long-term performance. This piece presents them with a synopsis.
A Brief Look at IGCC
Before going into the intricacies, however, let us have a brief look at the firm’s history and growth to date.
India Globalization Capital Inc was founded back in 2005 and its headquarters set for Bethesda, Maryland. As previously stated, the firm currently has two main portfolios: cannabis and legacy infrastructure, the former being the more recent development. The latter segment entails the firm trading infrastructure commodities such as iron and steel as well as renting heavy equipment necessary for the process. In cannabis, the firm has been engaged in the development and commercialization of cannabis-based solutions for Alzheimer patients, a number of endpoints of Parkinson’s, epilepsy, nausea as well as eating disorders. Moreover, there is also significant research going into the use of cannabis in the development of alternative therapies for chronic conditions as well as viruses such as AIDS.
As previously stated, the firm has been engaged in two activities: the development of new drugs and cannabis-infused drinks as well as the listing of their shares on the OTC market. This segment looks at the above two in detail.
New Cannabis-Based Solutions
The language in the 2018 Farm Bill has been a particular hit among cannabis companies as it alludes to the legalization – federal – of industrial hemp and its respective products which include hemp oil which contains CBD. Through this bill, CBD will indirectly be legalized, allowing companies to take advantage of this.
IGCC is currently working on the development of CBD-infused and branded drinks which will cater to the ever-growing demand for energy drinks. Through this, the firm expects to introduce CBD-infused drinks to the market, allowing them to take advantage of the growing market space thus make profits in the process. The firm is currently working with a manufacturer in Malaysia to try boost their development and production capacity. They two firms will leverage on their respective strengths and expertise to enhance this venture.
Ram Mukunda, CEO of IGC was quoted stating:
“By combining the experience of IGC with Hyalolex with the manufacturer in Malaysia, we potentially bring together unique expertise… This will help introduce an exciting CBD-infused energy drink to the market and the acquired knowledge base can be further leveraged to diversify the delivery method for IGC branded products…”
Listing on the OTC Market
Following the delisting of the firm from the NYSE, IGCC opted to list their shares on the OTC markets.
The delisting followed the firm’s failure to disclose important information pertaining their venture into the cannabis segment to their shareholders. According to the legal team handling this case, this would constitute a violation of section 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the U.S. Securities and Exchange Commission thus lead to the suspension of trading of the firm’s shares from the NYSE and its eventual delisting.
However, the firm’s CEO maintains that full disclosure had been done and that they would list on other exchanges which they did. Further to this, the increase in price alludes to investor confidence in the stock going forward. The decline in valuation was associated with the sell-off of shares due to fears from investors due to shares being delisted.
Despite the hiccups experienced, the firm expects that their venture into the cannabis sector will pay off thus their valuation will eventually rise. As such, it is expected that IGCC will soon be back to their high valuation and rise even higher over time. Growth is thus imminent for them.
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Disclosure: We have no position in IGCC and have not been compensated for this article.