When majority of fundamental shares including the blue-chips were on the back foot, stocks of Himadri Ltd – a small firm listed on the Dhaka Stock Exchange’s SME Board – witnessed an unusual price jump in the last one month.
In the last 30 days, the company’s shares surged by Tk 2,180 or over 245 per cent to Tk 3,069 per share till Tuesday, as per the DSE data.
When shares of the SME firm skyrocketed, the benchmark index of the country’s premier bourse recorded a significant plunge owing to jitters concerning the market outlook.
The company, which provides cold storage facilities for agro products such as potatoes across the country, also saw its share price soared by 80 times in the last three months.
The firm’s share price was Tk 38.8 each on April 27 this year, DSE data shows.
Meanwhile, Himadri on Tuesday informed the DSE that there was no undisclosed price-sensitive information for the recent unusual price hike of its shares.
Himadri, which operates six potato cold storage units in the northern part of Bangladesh and is a subsidiary of Ejab Group, has offloaded 11,775 shares, the lowest among the listed SMEs.
In the last seven days, the price of each of the firm’s shares jumped by Tk 1,337. Shares of the company, which belongs to the SME board – closed at Tk 3069.20 on Tuesday, up 10 per cent or Tk 179 from the previous day’s price. It traded only two shares on the Dhaka bourse on the day.
Market operators said the company decided to increase its authorised share capital before issuing new equity shares and raise the paid-up capital as the number of its shares remains very low.
This move might have influenced its stock price, they said.
In June this year, Himadri finally decided to increase its authorised capital by 25 times to Tk 50 crore from the existing Tk 2 crore, and the paid up capital to Tk 0.75 crore.
Himadri’s total number of shares currently stands at only 7.5 lakh, and more than 65.72 per cent of its shares are held by sponsor-directors.
The company paid a 10 per cent cash dividend for the year ended June 30, 2022.
The SME firm reported earnings per share (EPS) of Tk 3.67, and net asset value (NAV) per share of Tk 1,827.9 for the year ended June 30, 2022, compared to Tk 8.23 and Tk 1,822.92 for the same period the year before.
Top large-cap stocks yielded virtually no returns in the first half of 2023, while shares of many small-cap companies continued to rise sharply on the Dhaka Stock Exchange, an indication that investors believe they have hit their potential.
The market’s heavyweight multinational, billion-dollar Grameenphone (GP), accounts for over 8 per cent of the DSE total market cap, which is the highest single holding in the bourse.
A stock investor in that multinational company has not earned any capital gains from investments in the company in the last six months.
Not just GP’s investors, but investors in top market-cap companies have been disappointed in the first six months (Jan-Jun period of 2023) of this year, amid the Bangladesh Securities and Exchange Commission’s imposition of a floor price for stocks.
Meanwhile, shares of many small-cap companies continued to rise sharply in the country’s prime bourse in the last six months, while stocks of most large-cap firms remained stuck at their floor prices.
Investors in Himadri Ltd, which traded on the ‘DSE SME’ board, have earned over 5,000 per cent capital gains in the last half year, DSE data shows.
“The trading pattern on the SME Board looks unusual because a daily rise of 8 per cent to 10 per cent is not justifiable,” a stockbroker on condition of anonymity said.
Analysts and stock market insiders said this is not a good sign for the country’s stock market. If the trend goes unabated, it would pose a threat to market stability.
During the period, many investors were seen rushing towards rumor-based junk stocks, which helped many small-cap issues top the gainers board, they said.
Commenting on Himadri Ltd, a senior official from the Bangladesh Securities and Exchange Commission (BSEC) said, “We are looking into the matter. Investors should also be careful about the unusual price hikes of low-cap companies.”
Dhaka stocks dipped into the red for a recent period as the market pulse shifted to correction mode again due to shaky confidence across the trading floor induced by the weakening strength of the market trend.
They pointed out that the floor price mechanism has pushed investors into dismay as most stocks have been stuck at the floor for a long period of time.
