Delta Life stock price trebles in six months
Stocks of Delta Life Insurance Company Limited have tripled in value over the past six months even though the company reported lower revenue in its recent financial disclosure, raising concerns among analysts that manipulation might be taking place behind the scenes.
The insurer had thrice announced that there is no undisclosed price sensitive information that could have led to the abnormal rise in stock prices.
Still, its share value increased by 204 per cent to Tk 215, according to data from the Dhaka Stock Exchange (DSE).
As a result of its meteoric rise, the Delta is now the stock with the highest value among all 53 listed insurance companies.
“Beating all the odds, its stock price rose in such a way that it is clear some manipulators were involved,” said a senior official of a merchant bank preferring anonymity.
Regarding the odds in question, he pointed to the company’s drop in revenue in the last quarter it had disclosed.
The Delta’s consolidated revenue from July to September in 2019 stood at Tk 29 crore while it was Tk 35 crore during the corresponding period the previous year, showed the DSE data.
Besides, the company has not made any revenue disclosures since then and considering the fallouts of Covid-19, its condition could now be worse.
“But still the stock price was rising,” said the merchant banker.
In addition, the Delta is facing some serious issues regarding breach of regulations.
“So, the Insurance Development and Regulatory Authority (IDRA) took some actions against it to this end but still, the stock price increased against all odds,” he added.
The IDRA had appointed Sultan-ul-abedin Mollah as an administrator in the company last February on grounds of protecting policyholders’ interests.
The logic behind appointing an administrator was to unearth any breaches in regulations, which eventually came to light through special and investigative audits.
In the meantime, Mollah resigned and was replaced by Rafiqul Islam but after the latter eventually followed suit, the IDRA appointed Md Quddus Khan as administrator last Sunday.
“Despite all that, the company’s share value has been rising since April, making it clear that manipulators are involved,” the merchant banker said.
When a company’s share price rises without cause, it creates a confidence crisis among all investors.
“And this company is creating such a crisis,” said Sharif Anwar Hossain, president of the DSE Brokers’ Association.
Hossain questioned how the company could see such a rapid rise in stock value even after the IDRA had appointed an administrator after discovering its compliance issues.
The Bangladesh Securities and Exchange Commission (BSEC) has greatly developed its monitoring systems and so, it is possible to find out who is buying what from whom and why.
“So if any company rises abnormally, then the market regulator should check for signs of manipulation behind the scene,” he said.
Hossain went on to say that if left unchecked, manipulation leaves a dent in investor confidence.
Shaikh Shamsuddin Ahmed, a commissioner of the BSEC, said they have already changed the company’s board of directors.
“We also asked them to assess its financials and try to fix any issues,” he added.