United Power scrip soaring

From the day it was listed on Bangladesh's bourses, the United Power Generation and Distribution Company Limited (UPGDCL) has caused ripples and broken records.

The scrip has been the most traded in Dhaka Stock Exchange in 27 of the 28 days it has been on offer since its listing at Dhaka and Chittagong Stock Exchange on April 5 this year. On one day, it was the second most traded scrip.

Offered at Tk 72 Taka per share, it is now going for Tk 219 -- a 204 percent appreciation in just 28 days.

Shakeel Rizvi, former DSE president and now its executive director, told bdnews24.com: "There is no fundamental reason for such fast appreciation, but there was some technical reasons for that. The availability of this scrip is limited, general investor don't have much of it."

"After 30 working days from its listing, when institutional investors start to trade the scrip and its availability goes up, its NAV may fall," said Rizvi.

The directors of the company retain 90 percent of its shares, 5.5 percent of it are with institutional investors and only 4.5 percent of it are with general investors.

"It surely looks the scrip is trading very high when compared to other top scrips and it could well be due to investor perception that this will give very good returns," said Rizvi. 

The UPFDCL scrip's P/E ratio on Monday stood at 40.78 against the average P/E ration of energy sector companies of 13.45.

P/E or price earnings ratio is the ratio of the company's current share price to its earnings per share.

The UPFDCL prospectus says the company will supply power to consumers in Dhaka and Chittagong from an 88 MW and a 72 MW power plant.

Its scrip was offered at a premium of Tk 62 over the face value of Tk 10.

After the first day's trading, the scrip had jumped 87 percent to Tk 134.60.  On April 21, it touched the peak of TK 225.80.

Then it dropped continuously for four days - analysts may call it correction - to close at TK 173.40 on Apr 27.

Then it started to rise again to close at Tk 219 on Sunday - a 208 percent appreciation from the day it started trading.

On Monday, at 11am, it was trading at Tk 213.

UPGDCL has raised Tk 2.37 billion by offering 33 million shares.

The company declined comment for this article.

Its administrative officer Md Hafiz told bdnews24.com that their secretary would not comment on the matter.