Orion Infusion's stock jumps 46pc in a month sans PSI
The company to hold EGM and AGM today
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Orion Infusion's stock price has been flying high on the Dhaka Stock Exchange (DSE) without any specific reasons for investors to be keen on betting on the stock.
The stock price of the pharmaceutical company soared 46 per cent just in a month to close at Tk 438 on Sunday, up from Tk 299.2 on November 26. Its share price surged at a time when most companies remained stuck at the floor price for over a year.
Such an unusual price movement prompted the prime bourse to serve a show-cause notice to the company authority, enquiring about the reasons behind it. In response, the company said on Sunday that there is no undisclosed price-sensitive information (PSI) which might influence the stock price movements.
Even after the show-cause notice served, the company's share price did not retreat and jumped 6 per cent further on Sunday.
Market operators said the company's stock price has started to go up after its board decided to issue rights shares to increase paid-up capital in order to meet the regulatory requirement. At present, the company's paid-up capital is Tk 203.6 million.
On November 5, the company's board of directors announced plans to issue one rights share against existing two shares at Tk 20 each, including Tk 10 as premium per share.
The rights share issue is an offer of new shares by a company to its existing shareholders in proportion to the shares they already own and usually at a discount to market price within a specified time.
Last year, Bangladesh Securities and Exchange Commission (BSEC) asked a number of small-cap companies to raise their paid-up capital to at least Tk 300 million to comply with regulatory obligations.
"Rights shares issuance news might be a reason for price jump as a group of investors keep chasing its stocks not to miss out on the opportunity to make gains," said a leading stockbroker.
The rights share issue is subject to approval of the shareholders in the extraordinary general meeting and annual general meeting scheduled to be held today (Tuesday) and also of the BSEC.
Orion Infusion's stock had also ballooned more than 12 times in four months between June 26 and October 27 last year despite repeated warnings from the company that it has no undisclosed information.