The stock price of newly-listed Bangladesh Paints is rising 'abnormally' since debut a month earlier as it created an 'irrational hype' among investors.
Within a month since its debut, the SME company's share price jumped 460 per cent or Tk 46 each from its issue price of Tk 10 riding on short-term speculation.
The paint manufacturer's share price closed at Tk 56 on Tuesday on the Dhaka Stock Exchange (DSE). Its shares traded between Tk 10 and Tk 56.40 since debut on June 14.
The recent price surge prompted the prime bourse to serve a show-cause notice on the company to know whether there was any price sensitive information for recent unusual price hike.
The company, however, in a response said that there is no undisclosed price sensitive information of the recent unusual price hike and increase in volume of shares.
Even after being served show-cause notice, the company's share price has not stopped rising and jumped 9.16 per cent further on Tuesday.
Stock prices of SME platforms are soaring in recent times as the stock market regulator relaxed some conditions for trading shares on the SME board.
Market insiders said the investors showed their appetite for the new issue amid short-term speculation. So, it created an 'irrational hype' among investors since its debut.
The investors are blindly rushing towards its stock without conducting a proper analysis when they see the rise in values every day, according to a merchant banker.
As the number of shares of the SME companies is low, investors speculate that the stock price will rise further and so they are buying the shares, he said.
The investors should be careful about buying overvalued stocks in order to avert any misfortune, he added.
The SME firm has reported profit after tax of Tk 48.26 million for the year ended June 30, 2021, up by a whopping 54 per cent, from Tk 31.31 million in the corresponding period, according to audited annual financial statements.
The company's basic earnings per share (EPS) stood at Tk 0.97 for the year ended on June 30, 2021, as against Tk 0.63 for the year ended on June 30, 2020, said the company in a filing with the DSE on Monday.
However, post-qualified investors offer (QIO) basic EPS for the year ended on June 30, 2021 would be Tk 0.78.
Pre-QIO net asset value (NAV) per share is Tk 15.94 as on June 30, 2021 and the same is Tk 14.79, considering post-QIO.
The SME company raised Tk 120 million by issuing 12 million ordinary shares at a face value of Tk 10 each under the fixed price method.
The firm raised the capital through the qualified investors offer earlier introduced to ensure long term financing for the small capital companies.
The company will utilise the proceeds for building construction, machinery installation and working capital along with catering the expense of issue management.
The company's authorised capital is Tk 1.0 billion and paid-up capital is Tk 620 million while total number of securities is 62 million.
Sponsor-directors own 31.57 per cent stake in the company while institutional investors 5.28 per cent and the general public 63.15 per cent as on June 30, 2021 (year-end), the DSE data showed.
The company will not be allowed to issue bonus shares within three years of its debut trading on the SME Platform, according to the BSEC approval.
Incorporated in 2014, Bangladesh Paints is producing different types of paints including interior, exterior, wood & metal, industrial and marine paints. Its corporate office is situated at Tongi in Gazipur.
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