Despite facing a substantial working capital shortfall, the share price of Standard Ceramic Industries Limited experienced a significant uptick of 9.96% at the Dhaka Stock Exchange (DSE). The tableware producer’s shares closed at Tk151.2 apiece on Tuesday, compared to Tk137.5 in the previous trading session. During the day, a total of 1.86 lakh shares were traded at Tk2.77 crore.
Standard Ceramic’s share price had been stagnant at the floor price of Tk108.7 from August to November 2023. However, from 28 November to 12 December, the share price witnessed a remarkable 76% jump to Tk191.4. In response to a DSE query on 13 December, the company asserted no undisclosed price-sensitive information influencing the share price.
Despite the recent surge, the company reported a net loss of Tk12.29 crore in fiscal 2022-23, a significant increase from Tk1.93 crore in the previous fiscal year. Its revenue also declined by 27% year-on-year to Tk24.44 crore. The auditor, ARTISAN, highlighted a working capital shortfall, leading to reliance on bank borrowing for deficit financing.
With a cumulative loss of Tk20 crore, Standard Ceramic’s shareholders’ equity stands at negative Tk9.57 crore. The current liabilities of Tk40 crore against assets of Tk17.77 crore, which is 2.25 times higher than the assets, poses going concern threats to the company, as indicated by the auditor.
The company has not paid dividends to shareholders for the last two consecutive years due to losses. In the annual report for FY23, Standard Ceramic attributed the distortion in the ratio between current assets and liabilities to factors such as low demand, high inflation, fluctuating dollar rates, irregular supply, and high gas and electricity rates.
Market insiders raised concerns over the company’s limited shares, with only 64.60 lakh available, of which 45.22 lakh are tradable in the secondary market. This limited float may expose the company to manipulation risks.
