PRAJITA BUDHATHOKI
KATHMANDU, August 11

An ‘unnatural’ surge in share prices of companies such as Nepal Finance Limited (NFS), which has not been able to distribute a dividend to its investors for the past 14 years, has deepened the suspicions that attempts are being made to artificially hike share prices.

Besides NFS, the stakeholders have deemed the rise in share price of Kutheli Bukhari Small Hydropower Limited (KBSH) ‘unnatural’ as well.

While the per unit share prices of other finance companies stand below Rs 1,000, that of NFS reached Rs 2,049 last Thursday, the last trading day of the week. It is the most expensive share price among the finance companies. 

Until a month ago, the per unit share price of NFS was Rs 970. But, it has reached as high as Rs 2,154 since then.

The current share price of Goodwill Finance Company Limited  (GFCL), which ranks second among the finance companies in terms of share prices, is Rs 836 per unit.

NFS, which is Nepal’s first finance company from the private sector, has not been able to distribute a dividend to its investors since the fiscal year 2010/11. The company had distributed a 23.16% dividend, including 22% bonus and 1.16% cash, in that fiscal year. 

The company also saw a decline in its net profit from around Rs 20 million in fiscal year 2022/23 to around Rs 18 million in the last fiscal year, 2023/24.

The unaudited financial statement of the company for the fourth quarter of the last fiscal year shows that it is not in a position to distribute dividends as it has a negative retained earnings of around Rs 208 million.  

Similarly, its earnings per share (EPS) and net worth per share are Rs 2.48 and Rs 137.52, respectively.

Lawmakers have also raised questions in the parliament for the steep growth in share price of NFS in a short time without any strong basis.

Like NFS, the share price of KBSH also saw a sharp growth to Rs 2,726 per unit last Thursday. 

Earlier on June 30, a day before the NEPSE index started showing the continuous upward trend, it was Rs 1,450 per unit, 

When KBSH got listed in the secondary market on August 20 last year, its minimum and maximum trading prices were fixed at Rs 159.67 and Rs 479.09, respectively.

It currently ranks first among hydropower companies in terms of share prices.

While the company is yet to release its financial statement of the fourth quarter of the last fiscal year, its third quarterly report had shown net profit of over Rs 14 million.

Investor Dambaru Ballav Ghimire blames the increasing trend of stock market players influencing the share transactions of specific companies for such ‘unnatural’ hikes in share prices of companies with poor financial records.

“Many investors are at a risk of being trapped as the trend of market players attracting their investments to a certain company through a media campaign has increased,” Ghimire said. 

Nepal Stock Exchange (NEPSE) has also accepted that there has been an ‘unnatural’ share price hike of some companies.

Murahari Parajuli, information officer at NEPSE, said that there have been activities through social media to artificially hike share prices. “We need a law to stop such activities,” Parajuli said. 

“Many countries have made it compulsory to acquire a licence to become a share market analyst,” Parajuli added. “Such analysts are prohibited from participating in share transactions of the company which they analyse to prevent the conflict of interest. We need a similar provision in Nepal.”

Many investors, through social media, have accused one of the big investors Dipendra Agrawal of being active in creation of ‘unnatural’ demand.

Agrawal, who is often found active on the social media platform Clubhouse advising investors, told the New Business Age that his documents were taken away by the Securities Board of Nepal (SEBON).

He, however, claimed that he has only been involved in sharing his knowledge and experience and has no role in hiking share prices ‘unnaturally’.

“I am not a director of any company,” Agrawal said. “As an investor myself, I share my experience with other investors with the intention of helping them to easily make investment-related decisions.”