1 Name, 2 Companies: How Investors Lost Rs 4,372 Crore To The Wrong LG

What’s in a name? For investors, quite a lot. In a dramatic case of mistaken identity, the similarity in company names led investors to mistakenly pour over Rs 4,200 crore into the wrong stock, a costly blunder that sent the shares of a little-known Coimbatore-based firm soaring nearly 15% in a single day.

The confusion unfolded soon after LG Electronics launched its much-anticipated Initial Public Offering (IPO) last week. Eager investors, rushing to capitalise on the opportunity, appear to have bought shares of LG Balakrishnan & Bros Ltd instead, simply because of the shared “LG” tag. The frenzy pushed LG Balakrishnan’s stock into the upper circuit as trading volumes skyrocketed.

According to market data, investors collectively invested about

Rs 4,372 crore into LG Balakrishnan on Tuesday morning. The stock, which had closed at Rs 1,390 on Monday, shot up to Rs 1,600 within hours, before hitting the upper limit.

Founded in 1937 and headquartered in Coimbatore, LG Balakrishnan & Bros Ltd manufactures automotive chains and sprockets. Despite being a well-established player in the auto component sector, the company rarely sees heavy trading volumes. In the fortnight preceding the incident, only around 31,400 shares changed hands daily on average. But on the day of the mix-up, trading volume surged to an astonishing 6.84 lakh shares, more than 22 times the norm.

Brokerage firms attributed the buying spree to investor haste. “Following LG Electronics’ IPO buzz, the stock got a ‘buy’ tag from several analysts. In their rush, many retail investors appear to have purchased LG Balakrishnan instead of LG Electronics,” said a senior market analyst, requesting anonymity.

This is not the first time a name mix-up has rattled the markets. A similar incident occurred when investors mistakenly bought Tata Motors DVR shares instead ofTata Motors, causing the DVR stock to surge sharply before correcting when the error was discovered.

A more striking case was recorded during the pandemic when traders confused Zoom Video Communications, the popular video conferencing platform, with Zoom Technologies, a little-known Chinese firm. The latter’s stock price exploded by nearly 1,800% in a week before collapsing once the misunderstanding was cleared.

Market experts are now advising retail investors to double-check ticker symbols and company details before placing orders. “In an age of fast trading apps and IPO frenzy, even a small oversight can cost crores,” one brokerage house cautioned.