Stock prices of Kay & Que soar by 42% within a month, despite intensified regulatory review

Kay & Que, a company listed on the Dhaka Stock Exchange (DSE) since 1996, has seen a significant surge in its share price over the past month. The share price surged over 84%, from Tk190.9 to Tk352.1 per share as of 21 August. However, the financials provided by Kay & Que do not justify this sharp increase, as the company reported a decline in its revenue for the nine-month financials of the 2024-25 fiscal year.

The company's services and products are the sources of its revenue. Over the years, Kay & Que has undergone several changes. In 2023, it merged with MultiSourcing Limited, an IT firm, to bolster profitability and shift its focus towards a more diversified and sustainable business model. The company was established in 1983 with an annual production capacity of 200 million pieces of carbon rod for the dry cell battery industry. However, it has since shut down its operations of Carbon Rod, Coal Tar, and Pesticides manufacturing activities due to various constraints.

As of October 31, 2024, institutional investors held around 18.19% of Kay & Que, while sponsors and directors held 35.24% of the company's shares. Another source from a different date reports institutional investors holding 9.79% and sponsors and directors 21.47%, indicating some fluctuation over time. The free-float shares of Kay & Que are 45.29 lakh out of its total 69.93 lakh shares.

In response to the DSE's query on 27 July regarding the price hike of Kay & Que's shares, the company stated that there is no undisclosed price-sensitive information for the recent price hike. The P/E ratio of Kay & Que is 71.57 based on its latest un-audited financial statement, indicating a high valuation relative to its earnings per share (EPS) reported.

Kay & Que reported a profit surge to Tk2.53 crore in the nine-month financials of the 2024-25 fiscal year. The earnings per share (EPS) for the same period is Tk3.69, up from Tk2.45 in the July-March period of FY24. However, the revenue for the nine months was Tk16.23 crore, slightly lower than Tk18.85 crore for the same period of the previous fiscal year.

Currently, Kay & Que is running its business through the operation of CNG filling and re-fuelling station, a boulder business, and land lease of its factory premises. The company also paid a 3% cash and 2% stock dividend for its shareholders in an unspecified year.

The fluctuation in institutional investors' stake and the decline in revenue despite a significant profit surge have raised questions about the factors driving the sharp increase in Kay & Que's share price. The company's response to these questions and any further financial disclosures will be closely watched by investors and the DSE.