Does Far Chemical's elevated status portray its true picture?

Far Chemical Industries will be elevated to the status of B category stock from existing Z category as it has paid 1 per cent dividends to investors.
Earlier, the stock market watchdog placed it on the list of junk stocks for the company's failure to disburse the dividends it had recommended.
When a company is in the Z category, share transaction settlement takes a longer time. This gives investors a signal that the investment is risky.
So, after the disbursement of the dividends, the regulator will remove the red flag. From Thursday onwards, the stock of Far Chemical will be traded as B category stock.
But the relabeling of the stock does not reflect the business performance of the company.
The investors, who had invested in the stock before the merger of Far Chemical with non-listed S.F. Textile Industries, are still counting losses.
Pre-merger investors of Far Chemical have the value of their assets reduced by 31.13 per cent, calculated at the current market price.
The merger took place last year.
Before the merger, Far Chemical that produced textile dyeing products was in the red for the three years to FY23. Its cumulative losses amounted to Tk 362 million.
After the merger, it showed a profit of Tk 30.72 million for FY24, but declared only 1 per cent cash dividends for investors.
Its business performance has been poor since FY20. It has shown profits for two financial years among five. The company failed to provide any sustainable return to its investors for a long time.

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