Rahima Food Corporation, part of City Group, has experienced a remarkable increase in its share price, soaring nearly 138% within just two months. However, the company maintains that there is no undisclosed price-sensitive information that could have caused this unusual surge.
According to data from the Dhaka Stock Exchange (DSE), the stock was priced at Tk68 on 15 June and steadily rose to Tk161.70 by 7 August. Throughout this timeframe, the DSE issued three separate query letters to the company. In each of its responses, Rahima Food confirmed that there was no undisclosed information to account for the price increase.
Today, the stock experienced a decline of 1.05%, closing at Tk160, a drop that market insiders attribute to profit-taking by investors eager to capitalize on the recent surge.
Analysts have warned that the stock is currently trading in a highly precarious zone. Based on its unaudited financials, Rahima Food’s price-to-earnings (P/E) ratio is at 461.54, and even with the audited figures for 2024, the ratio stands at 149.53 – significantly exceeding the generally accepted risk threshold of 40.
The only price-sensitive announcement made by the company during this period occurred on 2 July, when it disclosed via the DSE website that operations at its coconut oil production facility had been suspended until further notice.
Shahidur Rahman, CFO of Rahima Food, previously informed The Business Standard that a decline in demand for coconut oil has resulted in a substantial stockpile for the company, leading to the suspension of its plant operations. Coconut oil contributes only a small portion to the overall revenue, while the processing of cashew nuts remains the primary business focus.
In the first nine months of FY25, the company generated over Tk5 crore from cashew sales compared to Tk19 lakh from coconut oil. Overall revenue decreased by 49% year-on-year to Tk5.71 crore, and net profit fell by 69% to Tk0.51 crore.
Founded in 1990 and listed in 1997, Rahima Food was delisted in 2018 due to extended inactivity. City Group acquired sponsor shares in FY17 and successfully relisted the company on the DSE in 2020.
Although its factory remained shuttered, Safko Spinning’s shares increased by 65% between June 22 and August 7, prompting the DSE to issue another query to the company. During a visit on February 3, a DSE inspection team verified the closure.
The corporation denied having any price-sensitive information that was not provided in their response dated August 10. Its stock dropped 1.36% to Tk14.50 yesterday.
On June 2, Safko announced that it had prolonged its production standstill until August 16, 2025, citing unfavorable textile market conditions and high raw material costs.
The Z-category company recorded a Tk38.89 crore loss in FY24, its second consecutive year of losses, and has not paid dividends for two years.
