Rahima Food says no undisclosed info behind 138% share price jump

Rahima Food Corporation, a concern of City Group, has seen its share price surge nearly 138% in just two months, but the company insists there is no undisclosed price-sensitive information that could have triggered the unusual rally.

According to Dhaka Stock Exchange (DSE) data, the stock traded at Tk68 on 15 June and steadily climbed to Tk161.70 by 7 August. During this period, the DSE sent three separate query letters to the company. In each response, Rahima Food said there was no undisclosed information to explain the price jump.

Today, the stock slipped 1.05% to close at Tk160, a decline market insiders attributed to profit-taking by investors looking to cash in on the recent rally.

Analysts have cautioned that the stock is now trading in a highly risky zone. Based on its unaudited financials, Rahima Food's price-to-earnings (P/E) ratio stands at 461.54, and even on the audited 2024 figures, the ratio is 149.53 – far above the generally accepted risk threshold of 40.

The only price-sensitive disclosure by the company during this period came on 2 July, when it announced via the DSE website that operations at its coconut oil production plant had been suspended until further notice.

Shahidur Rahman, CFO of Rahima Food, told The Business Standard earlier that declining demand for coconut oil has left the company with a large stockpile, prompting the suspension of its plant operations. Coconut oil contributes only marginally to revenue, while cashew nut processing remains the core business.

In the first nine months of FY25, the company earned over Tk5 crore from cashew sales versus Tk19 lakh from coconut oil. Overall revenue fell 49% year-on-year to Tk5.71 crore, and net profit dropped 69% to Tk0.51 crore.

Established in 1990 and listed in 1997, Rahima Food was delisted in 2018 due to prolonged inactivity. City Group acquired sponsor shares in FY17 and relisted the company on the DSE in 2020.

Meanwhile, the DSE has issued another query to Safko Spinning after its shares rose 65% between 22 June and 7 August, despite its factory remaining closed. A DSE inspection team confirmed the shutdown during a visit on 3 February.

In its 10 August reply, the company denied having any undisclosed price-sensitive information. Yesterday, its shares fell 1.36% to Tk14.50.

Safko, on 2 June, said due to adverse textile market conditions and high raw material costs, it extended its production halt until 16 August 2025.

The Z-category firm has not paid dividends for two years and reported a Tk38.89 crore loss in FY24, its second consecutive year in the red.