Market adversity has been pushing Square Pharmaceuticals Ltd shares, like all other blue-chip shares listed in the Dhaka Stock Exchange (DSE), at a devastating low despite the company fundamentals were in positive direction.
Amid continuous fall, mainly because of an adamant sell off from foreign-owned portfolios, the darling of the market did not even take two months to lose more than one-fourth of its price at the Dhaka Stock Exchange until middle of the last week.
On November 21, 2019 Square Pharma shares were traded at Tk 220 each at the DSE, which touched Tk 161 on last Tuesday.
At such a bad time, on Thursday morning, the company announced that both their board Chairman Samuel S Chowdhury and Managing Director Tapan Chowdhury will buy 3 lakh shares each from the public market. The shares will be bought from the bourses of Dhaka and Chattogram within 30 working days.
Investors shocked by the recent price fall were assured that the key people of the company are optimistic about the business and thus increasing their stake in the company, according to analysts.
Square Pharma also helped increase investors' focus to blue-chip shares, which had a good day at the bourse on Thursday.
The company came up at the top of the turnover list at the DSE, with a 7.5 percent price hike, which supported the market indices to recover as well.
The largest pharmaceutical company of the country is in the third spot at the DSE in terms of market capitalisation. With a market capitalisation of over TK15,000 crore the company is contributing 5.71 percent to the DSE's total.
Equity research note from BRAC EPL Stock Brokerage reveals, Square Pharma has maintained an average of 18.4 percent annual profit growth over last seven years, while annual average return from its shares was 12.2 percent.
The analysts at the investment research team had prescribed its clients in private to start buying Square Pharma shares at a rate over Tk 200 few months earlier. They still hold the recommendation with an increased weight as the stock is much cheaper now, according to a latest note the team sent to some selective clients.
Square Pharma posted Tk16.03 earnings per share for the fiscal year of 2018-19. Its shareholders got 42 percent cash and 7 percent stock dividend for the year.
Over the July-September quarter of 2019 the company posted an EPS of Tk 4.25, which was 4.02 for the same period of the previous year. On September 30, 2019 its net asset value per share was Tk 90.
The company closed at Tk178.40 per share on Thursday.
Sponsors and directors collectively hold 34.43 percent of Square Pharma shares, while institutional investors possess 10.28 percent, foreign portfolio investors 19.83 percent and general public owns remaining 35.46 percent.
Square Pharmaceuticals Ltd
Launched in 1958, Square Pharmaceuticals emerged as the industry leader in the mid-1980s, and got listed in the local stock exchange in the mid-1990s.
Company annual report reveals that the company, with around 17 percent market share, is selling a wide range of pharmaceutical products worth over Tk4,500 crore per year.
Moreover, it currently exports its products to over 40 countries, and that is expected to increase further in coming days.
It is a cash-rich company with no debt for the last few years.