Home Stock Market Loss-making Central Pharma’s stock surges 70pc in a month

Loss-making Central Pharma’s stock surges 70pc in a month

by fstcap

The stock price of Central Pharmaceuticals surged more than 70 per cent in just a month to Thursday on the Dhaka Stock Exchange (DSE) even though there are no reasons for investors to raise bet on the stock of the loss-making company.
The drug maker has been suffering losses for the past four consecutive years and the accumulated losses reached Tk 1.23 billion until FY’23.
The company even failed to declare any dividend after FY’19 when it disbursed only 1.0 per cent cash dividend for its shareholders.
The auditor has also found gross irregularities in its financial statements, including income, expenses, inventories, deferred tax, fixed assets, undistributed dividends, tax payments, and bank accounts.
Despite the grim performance, the stock continued to soar since November 14 and dominated the weekly turnover chart this week, with shares worth Tk 1.43 billion changing hands.
The stock has frequently made it to the top of the gainer list and turnover list in recent times even as the company reported a loss of Tk 6 million for July-September quarter this year.
Such an unusual price movement prompted the prime bourse to serve a show-cause notice to the company on December 6, enquiring about the reasons behind that. But the company returned a knee-jerk response, saying there was no undisclosed price-sensitive information which might influence the stock price movements.
Listed on the capital market in 2013, Central Pharma has remained in the group of ‘B’ category stocks for several years now despite its declaration of ‘no dividend’ every year after FY’19.
Central Pharma is among the 14 companies that the DSE is inspecting their factories, aiming to expose real scenario to the investors, as some are not in operation but has refrained from making any information public.
The share price surge of the loss-making company is raising questions and analysts are suspecting price manipulation behind the price jump.
The company’s stock price soared at a time when many good stocks have been enduring price erosion. Without manipulation, such a kind of price jump is not possible, said a leading broker.
Despite a lack of business growth, a company exhibits a rally in the stock market when a certain group of people influence the price while others join the rally not to miss out on the opportunity to make a quick buck.
A hike in the share price is unusual considering the current status of the company, said the stockbroker, adding that its stock is rising mainly due to some rumours that their values will increase further.
A vested group that does not care about the companies’ actual performance is targeting these firms as they have a low number of stocks, making them easy to manipulate.

Source: thefinancialexpress


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