Investors did not have much of an appetite for shares of Regent Textile Mills in its stock market debut, sending its shares up only 2% by the close of trading yesterday. The Chittagong-based textile mill for woven fabrics raised Tk125, based on the offering of five crore shares. In the morning on the day, the company’s shares opened at Tk31 and closed at Tk25.5 compared to an initial offer price of Tk25 per share on Dhaka Stock Exchange (DSE). The stock, however, struggled to gain some strength in the middle of the trade as most shares were traded between Tk26-Tk27 a share—which is marginally higher than its maiden offering price. Analysts attributed the stock’s dismal turnout to the market’s weak sentiment and the sectors as well. Some, however, see the company’s initial offer price mismatch with its financial health. “Negative sentiment is now hanging over the market, leaving impact on the textile company’s debut,” Md Moniruzzaman, managing director of IDLC Investments. In addition, the textile sector remained under pressure too due to fall in cotton price in the world market, he said. A financial analyst on anonymity said the current textile sector’s price earning (PE) ratio is 10. “And considering the company’s nine-month diluted earnings per share, which is Tk0.86, and the sectoral PE, its offer value stands at Tk12 per share, not Tk25.” The securities regulator, Bangladesh Securities and Exchange Commission, approved the company’s initial offer price at Tk25 a share, including the premium of Tk15. An executive familiar with the IPO process said: “It was a little bit disappointing, but this is just the beginning. It is a kind of company with a lot of long-term growth opportunity…” Regent Textile is the 42nd listed firm in the textile sector on DSE, accounting for 3.2% of the total market capitalisation. IPO subscription of the company was oversubscribed by 5.72 times. The company raised the funds for its BMRE (balancing, modernisation, rehabilitation and expansion) and to set up a new garment project.
