A 3.87 percentage point rise in foreign investors' stake in Olympic Industries in 2023 fuels curiosity because the biscuit maker drew investment at a time when local currency devaluation and floor price halved overall turnover in foreign portfolios.
The liquidity crunch created by the price restriction set off an outflow of foreign funds, resulting in a reduction in foreign stakes in the ownership structure of different sectors and companies last year.
On the contrary, the foreign stake in Olympic Industries broadened by a significant margin, contributing to the rise in foreign ownership in the food sector. Apart from Olympic Industries, Navana Pharmaceuticals, from the pharma sector, saw a slight increase in the share of overseas investors.
The common feature between these two companies was that their stocks were never stagnant on the floor in 2023.
In fact, the stocks traded much above the floor price throughout the year against the backdrop of a market that had stocks worth 60 per cent of the market value languishing at the lowest prices set by the regulator.
In the highly illiquid market, Olympic Industries ended the year on Thursday, the last trading session of the year, soaring 26 per cent to Tk 152. During the time, the foreign stake rose to 24.84 per cent.
The biscuit maker was the first choice in 2023 among the stocks that foreign investors usually invest in, because it was not trapped on the floor, said Salim Afzal Shawon, head of research at BRAC EPL Stockbrokerage, a top-tier brokerage firm.
Foreign investors prefer the flexibility of entering and exiting the market whenever they want and so felt comfortable in trading in Olympic Industries because the scope was there.
Those, who did not want to exit the market and sought repositioning in their portfolios, invested in Olympic Industries, added Mr Shawon.
Food, pharmaceuticals, and bank sectors have noteworthy shares of overseas investors. Among them, only the food industry saw a 0.10 per cent increase in foreign holdings because of Olympic Industries.
Olympic Industries, the market leader
The company is considered one of the best performing blue-chip stocks, which may have attracted foreign investors, said Md. Ashequr Rahman, managing director of Midway Securities.
"The biscuit manufacturer is showing a consistent financial performance and has further growth prospects," he said.
Olympic Industries is the market leader, capturing more than one-fourth share in the branded biscuit market, and holds the second position in the battery market in Bangladesh.
It manufactures and sells consumer goods, particularly branded biscuits and confectionery items, and batteries. It has posted a 21 per cent profit growth for the July-September quarter of 2023, having reduced administrative costs substantially.
The company managed to offset some of the additional cost by hiking the sales prices of all products by 10-15 per cent.
Its annual profit surged 29 per cent year-on-year to Tk 1.56 billion in FY23.
Following the robust growth, the board of directors declared a 60 per cent cash dividend for FY23, the highest in its history since listing on the stock exchanges in 1989.
Navana Pharma reports record profit
Navana Pharma climbed 14 per cent on the Dhaka Stock Exchange during the year to close at Tk 84.40 on Thursday.
Despite a cost escalation and the stronger dollar, the drug maker registered the highest-ever revenue and profit in FY23. Its revenue jumped 20 per cent year-on-year to 5.70 billion, while the net profit surged 31 per cent to Tk 356.90 million.
Meanwhile, Islami Bank witnessed the highest erosion in the foreign stake in 2023, as some corporate sponsors sold their entire stake in the block market.
For example, Saudi-based firm Al-Rajhi Co sold its holding of 159.9 million shares of the bank in October last year.
A lead broker, who deals with foreign investors, said both local and foreign investors had been skeptical about putting fresh bets mainly due to the floor price.
The market has been in a floor price trap and will not perform properly until the floor is lifted, he said.
Amid the lower participation of foreign investors, overall foreign transactions slumped 48 per cent year-on-year to Tk 21.67 billion in 2023, despite the roadshows conducted by the Bangladesh Securities and Exchange Commission in several countries to attract funds from abroad.
Floor price, cheaper local currency against the dollar, and repeated changes in policies hurting listed firms have remained as deterrent factors for overseas investors.
Still, BRAC Bank has the highest foreign stake, followed by Beximco Pharma, Navana Pharma, Olympic Industries, Renata, BSRM, and DBH Finance.
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