The stock price of JMI Hospital Requisite Manufacturing was rising 'abnormally' since its debut five months back amid an 'irrational hype' involving investors.
The medical equipment manufacturer's share jumped 48 per cent in a month to close at Tk 104.80 on Monday on the Dhaka Stock Exchange (DSE).
The company's share price skyrocketed 424 per cent or Tk 84.80 since its debut on March 31 last on the prime bourse, according to available statistics with the DSE.
The company's share price also rose 48 per cent in a month to close at Tk 105.20 on the Chittagong Stock Exchange (CSE) on Monday.
The recent price surge prompted the CSE to serve a show-cause notice on the company last week to know whether there was any price sensitive information about the surge.
The company, however, in a knee-jerk response informed the CSE that there was no undisclosed price sensitive information of the company behind the unusual price hike.
Even after being served a show-cause notice, the company's share price continued to rise and soared 9.97 per cent further on Monday, becoming the day's top gainer at the DSE.
The company's stock was also the second highest gainer on the port city's bourse, rising 9.93 per cent on Monday.
JMI Hospital Requisite raised Tk 750 million under the book-building method for purchasing machinery, constructing buildings, land development and repaying bank loans.
The cut-off price of shares of the company was Tk 25, but the general investors got the IPO share at Tk 20 each, a 20 per cent discount on the cut-off price.
Market insiders said the investors showed their appetite for the company's shares amid short-term speculation, creating an 'irrational hype'.
Most of the initial public offering (IPO) shareholders were unwilling to sell their stakes hoping for higher profit in future, said a merchant banker.
Each general investor received 51 IPO shares against an application of Tk 10,000 each on a pro-rata basis.
A big jump in its net profits and higher dividend expectations might have prompted the investors to buy the company's shares, said the merchant banker.
However, he said, investors should also be careful about buying overvalued stocks in order to avert any misfortune.
The company has reported a net profit of Tk 200.47 million in three months from January to March 2022, up by a whopping 227 per cent, from Tk 61.39 million in the corresponding period.
The company's earnings per share (EPS) jumped to Tk 1.60 for January-March 2022 as against Tk 0.49 for January-March 2021.
The company's nine-month EPS also rose 70 per cent to Tk 2.89 for July 2021-March 2022 as against Tk 1.70 for July 2020-March 2021.
Its net operating cash flow per share (NOCFPS) was Tk 2.38 for July 2021-March 2022 as against Tk 2.61 for July 2020-March 2021.
The company's net asset value (NAV) per share was Tk 30.69 as on March 31, 2022 and Tk 31.49 as on June 30, 2021.
The company's authorised capital is Tk 3.0 billion and paid-up capital is Tk 1.25 billion while the total number of securities is 125.29 million.
Sponsor-directors own 32.32 per cent stake in the company while institutional investors 39.38 per cent and the general public 28.30 per cent as on August 31, 2022, the DSE data showed.