Walton Hi-Tech Industries made a flying trading debut on Wednesday as its shares price jumped 50 per cent -- the highest allowable limit, riding on investors' 'irrational hype' over the new issue.
The local electronics giant's share closed at Tk 378 each on the Dhaka Stock Exchange (DSE), soaring 50 per cent, the highest allowable limit on its offer price of Tk 252.
Only 22 trades were executed of Walton Shares with a trading value of Tk 0.13 million on the DSE.
On the Chittagong Stock Exchange (CSE), the company's share price also rose 50 per cent to close at Tk 378 each, the highest allowable limit on offer price.
Walton Hi-Tech offloaded only 0.97 per cent shares as its cut-off price was set at Tk 315 each through electronic bidding by eligible institutional investors.
Market analysts said the investors showed their appetite for the new issue amid short-term speculation. So, it created an 'irrational hype' among investors on the debut trading day.
The company's trading was halted within the first five minutes of transactions as investors rushed to buy Walton shares. But no sellers were seen on the trading board.
The price of the shares of the company could not go up further despite high demand from investors due to the imposition of a new circuit breaker on debut shares, said a merchant banker.
As per the new rules, price limit of a new company will remain open 50 per cent on issue price on debut day and the following day, price limit will remain open 50 per cent on closing price of debut trading.
As per the securities regulator order dated March 19, 2020 and BSEC letter on June 25, 2020, the public offer price of each share shall be considered as the floor price.
Walton Hi-Tech Industries, which received regulatory approval from Bangladesh Securities and Exchange Commission (BSEC) on June 23 this year, raised a fund worth Tk 1.0 billion from the capital market under book-building method.
The IPO proceeds will be utilised for expansion of its business, repay bank loans and meeting the IPO related expenses.
The company has reported profit after tax of Tk 1.55 billion for January-March 2020 as against profit after tax of Tk 3.34 billion for the same period last year.
The company's post-IPO basic earnings per share (EPS) for January-March 2020 period was Tk 5.12 which was Tk 11.14 for the same period of the previous year.
In nine months for July 2019-March 2020, profit after tax was Tk 7.66 billion and basic EPS of Tk 25.53 as against profit after tax of Tk 7.26 billion and basic EPS of Tk 24.22 for the same period of the previous year.
However, post-IPO EPS would be Tk 25.29 for nine months period ended on 31 March 2020.
The post-IPO net asset value (NAV) per share was Tk 267.01.
Walton Hi-Tech's paid-up capital is Tk 3.02 billion and authorised capital is Tk 6.0 billion while the total number of securities is 302.92 million.
Sponsor-directors own 99.03 per cent stake in the company while institutional investors own 0.46 per cent and general public 0.51 per cent as on June 30, 2019 (year-end).
Founded in 1977, Walton Hi-Tech Industries began manufacturing refrigerators, freezers, air-conditioners and compressors in early 2008.