Libra Infusions flying high on DSE sans price-sensitive information

The loss-making Libra Infusions has been flying high on the Dhaka Stock Exchange (DSE) at a time when many fundamentally sound stocks have been enduring price erosion.

The company is suffering from acute shortage of working capital, which has hampered its production. It suffered a loss of Tk 8.53 million in January-March 2021. But since then, the company has not published any financial data, keeping shareholders in the dark regarding the company's performance.

Libra Infusions also failed to declare any dividend in the last three years since FY'20 when it paid a 5 per cent cash dividend.

Despite the grim performance, the company's share price jumped 30 per cent to Tk 1,054.2 on Thursday, in just two weeks.

The stock price surged 57 per cent in the past three months although it did not disclose any price-sensitive information.

Such an unusual price movement in recent times prompted the prime bourse to issue a show-cause notice recently on the company, enquiring about the reasons behind that.

The company made a copycat response, saying there was no undisclosed price-sensitive information for the recent price hike.

Even after being served show-cause notice, the company's share price has not stopped rising.

The abnormal price surge of Libra Infusions in absence of any valid reason is raising questions while analysts suspect that manipulation is behind such an unusual price surge.

Low paid-up capital makes it easy for gamblers to manipulate the price, said Prof Abu Ahmed, a former chairman of economics department at the University of Dhaka.

The price rise is unusual considering the current status of the company and the vested group might be behind the price surge, he said.

"General investors keep chasing many low-profile stocks when they fly on the bourses just to make capital gains overnight, but when people start investing in them, manipulators dump their holdings," he explained.

So, general investors should be cautious about investing in such company, he added.

The company's low paid-up capital -- Tk 15.02 million -- makes it an easy target for gamblers seeking to manipulate trading, said a merchant banker.

The number of securities is 1.50 million.

Like Libra Infusions, many other stocks frequently make their way to the top gainers' list, riding on rumours that investors are putting money into the securities.

"If these stocks face corrections, investors will be the ultimate losers," the merchant banker said. Investors should be careful while buying junk stocks in order to avert any misfortune.

Listed in 1994, sponsor-directors of the company own 34.43 per cent stake in the company while institutional investors own 11.07 per cent and the general public 54.50 per cent as of August this year, the DSE data showed.

An official of the Bangladesh Securities and Exchange Commission (BSEC) said they are looking into the matter and the investors should also be careful about the unusual price hike of the low-profile companies.

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