IPDC Finance's price surge draws regulatory scrutiny

The stock market watchdog ordered the Dhaka Stock Exchange (DSE) to find out why the share price of non-bank financial institution IPDC Finance surged 57 per cent in just 14 trading sessions without any apparent disclosure.
The shares of IPDC Finance were trading at just Tk 18.9 on June 1 and then jumped to Tk 29.6 by June 18. Following this sharp price surge, the Bangladesh Securities and Exchange Commission (BSEC) issued a letter instructing the DSE to find out the reasons behind it.
As one of the financially stable listed NBFIs, IPDC Finance is currently in a recovery phase. After its net profit declined by one-third following a peak in 2022, the company's profit margin has been slowly improving. It recovered roughly half of the reduced profit by 2025.
Despite the improvement, IPDC Finance's net interest margin in 2025 was low compared to its level in 2022. According to the company's financial statements, its net profit margin stood at 13.07 per cent in 2025, down from 27.75 per cent in 2022, as its cost of funds escalated from just 6.23 per cent in 2022 to over 10 per cent in 2025.
The latest earnings disclosure on May 11 for the first quarter of 2026 shows a jump in earnings per share (EPS) from Tk 0.09 to Tk 0.16. However, its cash flow from operations turned negative due to a lower inflow of customer deposits.
The stock's rally, however, began following the resumption of trading after the dividend record date. While the company declared a 5 per cent cash dividend and a 5 per cent stock dividend by June 1 for 2025, the market watchdog seems puzzled over what triggered the sudden price surge.
The regulator has formally directed the DSE to launch a thorough investigation into the "abnormal price movement and trading behavior" of IPDC Finance shares. The DSE has been mandated to submit a comprehensive probe report to the commission within 30 working days from the letter's issuance date - June 18.
The probe will focus on identifying any coordinated or manipulative trading practices, detecting prohibitive insider trading activities involving any misuse of unpublished price-sensitive information, and ensuring strict compliance with margin rules among stockbrokers and dealers.
Furthermore, the regulator has instructed the DSE to foster awareness among brokerage executives and compliance officers to clamp down on suspicious trade executions that breach established securities laws.
Meanwhile, the stock fell to Tk 27.3 on Monday.
With the current price, IPDC Finance's P/E ratio exceeds 40, making the stock highly overvalued, considering that sector leader IDLC Finance has a P/E ratio of approximately 7 and the sector's average P/E ratio stands at 12.

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