What's behind the surge in Miracle Industries shares

The share price of Miracle Industries Ltd soared by 65% in nine trading sessions after it secured the job to supply 20% of the Bangladesh Chemical Industries Corporation's (BCIC) total requirement for woven polypropylene and polyethylene bags.

In the first week of this month, the industries ministry issued a directive, a copy of which was seen by The Business Standard, making the procurement mandatory for BCIC, which operates under the ministry.

However, the company has not yet made any official disclosure. Its shares closed at Tk27.10 each yesterday.

Md Omar Faruk, company secretary of Miracle Industries, told TBS that they had not received any official letter regarding the matter.

He mentioned that the company had submitted its application several years ago. At one point, BCIC sourced most of its bags from Miracle Industries. However, the government later shifted its approach and began procuring bags through open tenders.

"With the new decision, the company will now have the opportunity to supply bags to BCIC again," he added.

According to the ministry's order, BCIC will purchase these products using the direct procurement method, considering the company's production capacity and actual demand.

According to BCIC officials, a significant portion of the demand for such bags is determined by the production and import of fertilizer. The exact quantity of bags to be purchased will depend on the government's decision. The officials also noted that they had not received any official letter yet.

In FY25, BCIC estimated the total demand for urea fertiliser to be approximately 27 lakh tonnes. To meet this demand, it set a production target of around 10 lakh tonnes and an import target of 17 lakh tonnes.

Miracle Industries, founded in 1995 as a joint venture with state-owned BCIC and four entrepreneurs, manufactures various types of bags for cement, fertiliser, salt, feed, sugar, food grains, and chemicals.

The company has two manufacturing units located in Sreepur and Gazipur, one for the local market and the other for exporting products.

According to the company's original shareholders' agreement, Miracle has two groups of shareholders: Group A, which includes BCIC and holds a 20% stake, and Group B, which includes the four entrepreneurs and holds a 10% stake.

In August last year, Mehmood Equities Ltd took responsibility for reviving Miracle Industries Ltd, a publicly listed company that had been inactive for the previous two years.

On 30 September, Miracle Industries announced that Mehmood Equities, as the new owner, had appointed three directors to its board and outlined plans to invest the required funds to restart operations.

The four entrepreneurs – Asadur Rahman Mirza, Md Wahiduzzaman Chowdhury, Rafiqul Murshed, and Pavarton Securities (owned by one of the entrepreneurs) – sold their entire stake to Mehmood Equities under a negotiated deal in July 2023. After selling their holdings, they resigned from the board.

Mehmood Equities then nominated its chairman, AKM Sahabub Alam, as managing director of Miracle, with Showkat Mehmood and Nayan Mehmood as directors of the company.

Miracle Industries was profitable until FY19, with revenue of Tk60 crore and a net profit of Tk0.77 crore. According to its financials, the company earned its highest-ever revenue and profit in FY17.

However, in FY20, it incurred a record loss of Tk12 crore, with an 85% drop in revenue to Tk9 crore due to a conflict between Group A and Group B shareholders. It also stopped exporting products after FY19, when it earned Tk23 crore from exports.

For the July to September period of FY25, the company incurred a loss of Tk2.85 crore, compared to a loss of Tk2.68 crore in the same period of the previous fiscal year. Its loss per share in this quarter stood at Tk0.81, compared to a loss of Tk0.76 a year ago. Its net asset value per share stood at Tk12.82 as of September 2024.

In FY24, the company did not recommend any dividend for its shareholders. As of November 30, 2024, the sponsors and directors jointly hold 30.26% of the company's shares, while institutions hold 4.89%, foreign investors hold 0.20%, and general investors hold 64.65%.