GPH Ispat rises on high hopes for rights shares

The stock price of GPH Ispat jumped 4.44 per cent to Tk 28.2 per share on the Dhaka Stock Exchange (DSE) on Sunday after the steel manufacturer announced its decision to issue right shares.
The board of the Chittagong-based steelmaker has decided to issue rights shares to raise Tk 2.42 billion to enhance production capacity so that it can meet the growing demand, according to a stock exchange filing on Sunday.
Following the news, investors rushed to grab the company's shares. Its stock traded between Tk 27 and Tk 28.3 per share on Sunday.
Some 1,121 trades were executed with a total of 1.25 million shares changing hands. The turnover was Tk 35 million on the Dhaka bourse.
The rights issue is an offer of new shares by a company to its existing shareholders in proportion to the shares that they already own and usually at a discount to the market price within a stipulated time.
As per the board decision, GPH Ispat will issue one rights share for every three existing shares at Tk 15 each, including Tk 5 as a premium, meaning the company will issue 161.29 million rights shares, subject to approval by the shareholders and the regulatory authorities.
The company will hold an extraordinary general meeting (EGM) to receive shareholders approval on October 20. The record date for EGM is Septembers 18.
Another record date will be fixed for entitlement of rights shares after getting approval from the Bangladesh Securities and Exchange Commission.
The rights proceeds will be used to install a new furnace at the company's newly-expanded plant, which will help boost the production capacity. The company is expected to generate additional Tk 4.50 billion in annual revenue.
However, GPH Ispat did not specifically mention the expected production rise.
Company secretary Md Mosharof Hossain could not be reached for comments.
Incorporated in 2006, GPH Ispat is engaged in the manufacturing of MS Billet and MS Rod.
In June 2021, GPH Ispat started commercial production at its new plant, which was built using quantum technology, the first in Asia and the second in the world, at the cost of Tk 25 billion.
Currently, the annual production capacity of the company is 1,050,000 tonnes of billet and 790,000 tonnes of rod and medium section products.
As the new plant came into operation, the company witnessed a substantial increase in revenue, which escalated more than six times to Tk 59 billion in FY23.
Meanwhile, GPH Ispat registered a profit of Tk 643 million in the nine months through March this year, riding on the relative stability in the exchange rate as it helped reduce expenses for imports of raw materials.
The steel manufacturer suffered losses of Tk 315 million in the same period of the previous fiscal year.
Earlier, GPH Ispat raised Tk 2.62 billion through rights shares in 2016 for capacity expansion.

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