Daffodil Computers to issue shares at Tk10, far below market price
Daffodil Computers took around Tk47 crore in loans from the Daffodil Family concern, and its total loans stand at around Tk65 crore
Daffodil Computers plans to issue fresh shares to convert loans from Daffodil Family businesses into equity at Tk10 per share, significantly lower than today's closing price of Tk63.9 on the Dhaka Stock Exchange (DSE).
Following a stock exchange filing yesterday revealing the plan, Daffodil Computers' shares declined by 6.72%, or Tk4.6, from the opening price of Tk68.50 per share.
Daffodil Computers, a concern of the Daffodil Family, is engaged in IT solutions, computer assembly, and software development.
According to the disclosure, the company's board has approved the issuance of 4.67 crore shares at Tk10 each to convert a loan from the Daffodil Family concern into equity shares.
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The issuance of fresh shares is subject to the approval of the Bangladesh Securities and Exchange Commission (BSEC), as stated in the disclosure.
Md Monir Hossain, company secretary of Daffodil Computers, told The Business Standard, "The company has taken around Tk47 crore in loans from the Daffodil Family concern over the last two to three years. However, the company failed to repay the loans, which has weakened its financial health. Consequently, the management has decided to convert the debt into equity."
Monir added that the company currently has approximately Tk65 crore in loans, including those from banks.
When asked about the lower price for the new shares, he said, "The board has made the decision and will now apply to the regulator. If the regulator approves, the shares will be issued."
According to the DSE, Daffodil Computers' paid-up capital stands at Tk49.91 crore, divided into 4.99 crore ordinary shares.
The IT firm, listed on the bourse in 2006, has a shareholder structure as of 31 October, with sponsor-directors holding 41.40%, institutional investors 34.51%, foreign shareholders 0.10%, and the general public 23.99%.
After a decline in profit during FY24, the company reported a further 21% drop in profit during the first quarter of the current fiscal year. From July to September, it posted a profit of Tk78 lakh, down from Tk99 lakh in the same period the previous year, while consolidated revenue stood at Tk13.15 crore.
In FY23, the company experienced a 61% decline in profit compared to the previous year. Its earnings per share (EPS) fell to Tk0.21 from Tk0.54 in FY22.
Daffodil Computers has recommended a 5% cash dividend, pending approval at its upcoming annual general meeting scheduled for 29 December. In FY23, the company reported a profit of Tk2.69 crore and paid a 5% cash dividend to its shareholders.
