High price boosts Salvo Chemical's profits

Salvo Chemical – which produces sulfuric acid, sulfate, battery-grade water and glucose – posted a five-time higher profit in the first nine months of the current fiscal year due to high prices driven by a massive demand for the products.

Higher profit also attracted investors and that is why its shares price increased 4.30% to close at Tk65.50 on the Dhaka Stock Exchange (DSE) on Tuesday.

In the last month, its share price jumped 28% amid a slowdown in the key index of the country's premier bourse.

A senior official of a brokerage firm said the company has been showing good growth in profits since the first quarter of the current fiscal year. And investors are buying its shares on the idea that this growth will sustain.

He added that the company's board does not collectively hold 30% of the shares. So its directors will buy more shares to meet this regulatory requirement.

Many investors are also thinking that this will increase the price of shares. The company's managing director has already bought some shares. Its board shareholding has risen from 22.41% to 25.18%, he said.

Meanwhile, in the July-March period of FY2022, its net profit stood at Tk16.19 crore, which was Tk2.75 crore in the previous year at the same time.

During the time, its revenue jumped 81% to Tk92 crore from that of the previous year.

The company said in its financial statements that during the first three quarters, total sales have increased due mainly to huge demand for the products and high prices in the local market.

Besides, Salvo Chemical announced that it started the corn starch production on 16 May after resolving and compiling all required machinery setup. It invested Tk70 crore to set up the plant.

The company will earn Tk32 crore yearly from the corn starch unit, according to its price-sensitive disclosure.

The investors received a 2% cash dividend for FY2021 from the company.