Orion Infusion erodes 72pc on DSE since October
More retail investors put money during the 5-month rally since June 2022 to see their investments wiped out
Orion Infusion plummeted by Tk 705 or 72 per cent each share in the past five months from its peak reached in the end of October last year.
It had taken almost equal time to multiply 12 times to Tk 973.9 back then. The company's share closed at Tk 268.80 on Wednesday.
The rally was mainly driven by speculation. It could not be averted even after repeated claims that there was no hidden information behind the price jump.
At its peak, the market-cap of Orion Infusion was as high as Tk 20.07 billion and then it tumbled to Tk 5.62 billion on Wednesday.
When the stock began rising in June 2022, the stake of individual investors in Orion Infusion was 42.44 per cent. More and more retail investors put bets on the stock hoping for gains, which led to the stake going up to 53.36 per cent by January. The latest data at the end of February shows the figure unchanged.
During the same period, foreign investors offloaded their shares, reducing their stake from 0.19 per cent in June 2022 to 0.06 per cent in January this year. The stake has gone up to 0.07 per cent by the end of February.
The stock of Orion Infusion was flying high at a time when the market was passing through tough times. Having suspected price manipulation, market analysts sent out cautionary signals -- repeatedly.
The unusual price surge had prompted the prime bourse to serve a show-cause notice to the company several times.
"It had not matched the company's financial performance and so the stock fell, which was expected," said Abu Ahmed, a former professor of economics at the University of Dhaka.
A concern of Orion Group, Orion Infusion made a profit of Tk 21 million in the first half of the current fiscal year, growing at only 5 per cent compared to the same period a year earlier.
The company's annual profit rose 53 per cent year-on-year to nearly Tk 43 million in the FY22 and it disbursed 20 per cent cash dividend to shareholders for the year.
The board of the company at first declared 10 per cent cash and 10 percent stock dividends for the FY22. But, it failed to get approval of the securities regulator for the stock dividend.
The Bangladesh Securities and Exchange Commission (BSEC) asked the board to give cash dividend of the same amount instead in the interest of investors.
A rumour that the company would declare rights shares had spread before the dividend declaration, but that did not happen, much to the disappointment of investors, market insiders say.
Since then, the company's stock price has been on a downward spiral while the latest earnings disclosure prompted investors to dump their holdings.
"The stock was overpriced. The return on investment was unlikely to support that," said an asset manager preferring anonymity.
Prof Ahmed said a group of dishonest traders had been behind the artificial price hike.
"When people started to invest in them, manipulators dumped their holdings, causing the stock to plunge," he added.
The company's stock price is still much higher after the huge price erosion, compared to its peers in the pharmaceuticals sector, such as Square Pharma, ACI, Beximco Pharma, and Acme Pharma.
Orion Infusion is the 9th priciest stock among 34 listed companies in the pharma & chemical sector on the Dhaka Stock Exchange, data shows.
A top official of a brokerage firm said stocks on several occasions rose due to influence by big investors. Many have a tendency to bet on stocks with weak fundamentals for quick gains, said the official who wished not to be named.