4 months ago

Central Pharma's stock soars 63pc in one month

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Central Pharmaceuticals Limited's stock price surged by over 63 per cent in just one month on the Dhaka Stock Exchange (DSE), despite a lack of apparent catalysts to justify investors' interest in the stock.

The drug maker has incurred losses for the past four consecutive years, with accumulated losses reaching Tk 1.23 billion by the end of FY'23.

The company even failed to pay any dividend after FY'19 when it disbursed only 1.0 per cent cash dividend for its shareholders.

The auditor of the company also spotted gross irregularities in its financial statements, including income, expenses, inventories, deferred tax, fixed assets, undistributed dividends, tax payments, and bank accounts.

Despite such grim performance, the stock continued to soar and rose 24.72 per cent this week and dominated the weekly turnover chart.

According to the DSE data, some 51.93 million Central Pharma shares were traded during the week, generating a turnover of Tk 1.60 billion, which was 4.53 per cent of the week's total turnover.

The stock has made it to the top gainers' and top turnover lists frequently in recent times even after the firm has been sustaining losses. The company reported a loss of Tk 18 million for July-December period this year.

However, the stock price more than doubled in just three months (between November 30 and February 29) and closed at Tk 33.30 on Thursday, despite no disclosure of price-sensitive information.

Such an unusual price movement prompted the prime bourse to serve a show-cause notice on the company authority several times, enquiring about the reasons behind that.

The company returned a knee-jerk response, saying there was no undisclosed price-sensitive information which might influence the stock price.

Listed on the capital market in 2013, Central Pharma has remained in the group of B category stocks for several years despite declaring no dividend after FY'19.

Central Pharma is also among 14 companies the DSE is inspecting, aiming to expose the real situation of their factories to the investors, as some are not in operation but have refrained from making any information public.

The share price surge of the loss-making company is raising questions and analysts suspect that price manipulation might be 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.

A hike in the share price is unusual considering the current status of the company, he said, 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.

The general investors keep chasing stocks as they fly on the bourses to make capital gains overnight, a tendency that manipulators cash in on by selling off overvalued stocks to general investors.

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