S Alam Cold Rolled Steels share surges 141% in 2 weeks despite financial woes

The share price of S Alam Cold Rolled Steels has witnessed a whopping 141% rise in just two weeks, a dramatic rise that has baffled market participants given the company's severe operational and financial difficulties.

The stock secured the top position on the weekly gainers' list of the Dhaka Stock Exchange (DSE), even as the company struggles to sustain its business operations.

During these trading sessions, the company's share price climbed to Tk23.60 last Thursday, up from Tk9.80 two weeks ago.

S Alam Cold Rolled Steels, the only listed entity under the controversial S Alam Group, has been under intense scrutiny due to its financial troubles. The company recently disclosed that its bank accounts had been frozen and that it faced restrictions on opening letters of credit (LCs), severely impacting its operations. Additionally, its market capitalisation has plummeted by over 63% since July 2024, reflecting a sharp erosion of investor confidence.

Despite these challenges, the stock's unexpected rally has left investors and analysts speculating about the reasons behind the sudden uptick. Some market observers attribute the surge to speculative trading or short-term market dynamics.

In January 2024, Janata Bank announced plans to auction the S Alam Cold Rolled Steels' mortgaged assets. The bank's Sadharan Bima Bhaban Corporate Branch in Chattogram made the decision after the company failed to repay its loans despite repeated notices and summons, according to an auction notice published in newspapers.

As per the auction notice, S Alam Cold Rolled Steels had an outstanding loan of Tk2,003 crore as of 30 November 2024. Janata Bank stated that the loans had been defaulted due to non-payment under agreed conditions and that the borrower failed to settle the dues despite repeated demands.

S Alam Cold Rolled Steels, listed on the stock market in 2006, specialises in manufacturing cold-rolled steel strips (CR strips), CI sheets, and GP sheets. Its factory, built on 12.02 acres, is located at Shikalbaha under Patiya upazila of Chattogram.

According to the unaudited financial statement for the July-March period of fiscal year 2023-24, S Alam Cold Rolled Steels reported total loans amounting to Tk2,036 crore, reflecting a 44% increase compared to the same period the previous year.

During the third quarter of FY24, the company recorded revenue of Tk388 crore and a net profit of Tk2.50 crore, compared to Tk474 crore in revenue and Tk5.69 crore in net profit in the same period the previous year.