The share price of Himadri Ltd – a small firm listed on the Dhaka Stock Exchange (DSE) SME Board – has skyrocketed in the last three months, despite the premier bourse’s key index showing a bearish mood.
Himadri, which provides cold storage facilities for agro-based products such as potatoes across the country, saw its share price soar by 5,300 per cent or 54 times, to Tk 2,096 in the last 80 trading sessions.
Even though there is no undisclosed price-sensitive information (PSI) behind such a price surge.
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 795. Share of the company – which falls under SME – closed at Tk 2096.4 on Wednesday, up 10 per cent or Tk 190.5 from the previous day. It traded only one share at the Dhaka bourse on the day.
Its share price was Tk 38.8 each on April 27 this year, show data from the DSE website.
Market operators said the company has decided to increase the authorised share capital before issuing new equity shares, and raise the paid-up capital as the number of shares is very low, which influences its stock price.
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 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 the shares are held by sponsor-directors.
The company paid a 10 per cent cash dividend for the year ended June 30, 2022. The company reported earnings per share (EPS) of Tk 3.67, and net asset value (NAV) per share of Tk 1,827.90 for the year ended June 30, 2022, compared to Tk 8.23 and Tk 1,822.92 year-on-year.
Market shifts to correction mode
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.
The potential resurgence of political tensions have put investors into dismay, while small investors, having their backs to the wall owing to the ongoing inflationary pressure, sell shares when a stock breaks out from the floor price, causing a constant downward trend in the market, stock analysts say.
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.
The market has been in a bear trend for more than a year since the securities regulator imposed the floor price. Buyers are hesitant to buy stocks, even at the lowest price.
Besides, 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, show DSE data.
“The trading pattern on the SME Board looks unusual because a daily rise of 8 per cent to 10 per cent is not justifiable,” said a stockbroker on condition of anonymity.
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 be careful about the unusual price hike of the low-cap companies.”
