Standard Ceramic stock soars despite working capital shortfall
The share price of Standard Ceramic Industries Limited went up by 9.96% at the Dhaka Stock Exchange (DSE) despite the tableware producer having a substantial shortfall in working capital.
On Tuesday, the company's shares closed at Tk151.2 apiece, which was Tk137.5 in the previous trading session. On the day, a total 1.86 lakh shares of the company were traded at Tk2.77 crore.
From August to November 2023, its share price was stuck at the floor price of Tk108.7 each. But from 28 November to 12 December last year, the low-cap company's share price jumped 76% to Tk191.4 each.
In response to a DSE query letter on 13 December, the company said it has no undisclosed price sensitive information which might have impacted the share price. Then by 1 January, Standard Ceramic's share price slid 28%.
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Meanwhile, Standard Ceramic's net loss in the fiscal 2022-23 stood at Tk12.29 crore, which was only Tk1.93 crore in the previous fiscal. Its revenue also declined by 27% year-on-year to Tk24.44 crore.
The company's auditor ARTISAN said in the financial statement, Standard Ceramic is facing a working capital shortfall, which has led to its dependency on bank borrowing for deficit financing.
Its Tk20 crore accumulated loss has dragged down the shareholders equity to negative Tk9.57 crore. Current liabilities shown in the financial statement is Tk40 crore against the assets of Tk17.77 crore, which is 2.25 times higher than the assets.
This has ultimately created going concern threats to the company, the auditor added.
Besides, it failed to pay dividends to its shareholders for the last two consecutive years due to losses.
The company stated in the annual report for FY23, the ratio between current assets and liabilities has distorted due to the low demand, high inflation, dollar rate fluctuation, and irregular supply and high rate of gas and electricity.
Market insiders said Standard Ceramic has only 64.60 lakh shares, where 45.22 lakh shares are available for trading in the secondary market of the stock exchanges. So, anyone can take advantage by manipulating these shares.
