Companies earning massive premiums from auction; See which companies have collected more premium from auction

- ShareSansar, July 2, 2017  on Company Analysis , Exclusive , Featured , Financial Analysis , Latest , Share Auction , Stock Market

Many companies have been issuing right shares to their shareholders to further increase their capital. However, not all shareholders claim their right shares due to various reasons. These unclaimed right shares are eventually sold into auction, where other general public can bid for them. Nowadays, the unclaimed right shares have also been an opportunity for the company to increase their reserve. Premium collected from the sales of unsold right shares are added to the share premium account under the reserve of the company, which is free reserve and can be utilized to distribute bonus shares to its shareholders. Collection of premium from auction strengthens the company leading to increment in the net worth of the company.

In this analysis, ShareSansar has analyzed which companies have earned the most amount from premium collected through auction shares. In FY 2073/74, 58 companies have sold their unsold right shares through auction.

In the analysis below, figures of premium are calculated only on the basis of units sold multiplied by cutoff price. This means that the company has earned a minimum of this amount as share premium. The analysis shows that Agricultural Development Bank Limited (ADBL) and Citizens Bank International Limited (CZBIL) have collected the most amounts from sales of their shares.

  1. Commercial Bank’s Premium collection:


Above table shows that ADBL and CZBIL have collected more premium among the commercial banks that have auctioned their unclaimed right shares. ADBL and CZBIL have collected around Rs 51.37 crore and Rs 38.50 Crore respectively by selling 19.68 lakhs and 6.28 lakh unit ordinary shares and 77,676 unit promoter shares.

  1. Development Bank’s Premium Collection:

dev bank

Muktinath Bikas Bank Limited (MNBBL) and Sewa Bikas Bank Limited (SEWA) stood at the top of table among development banks with the total premium collection of around Rs 5.50 crore and Rs 3.34 crore. They have sold 103,167 units and 221,607 units ordinary shares, and 10,494 units and 752,151 unit promoter shares respectively.

  1. Finance Company’s Premium Collection:


In finance sector, Sagarmatha Fnance Limited (SAFL) and Shrijana Finance Limited (SFFIC) have collected premium of around Rs 2.34 Crore and Rs 91.75 lakh by selling 167,144 unit and 30,552 unit ordinary shares and 566,279 unit and 30,670 unit promoter shares respectively.

  1. Microfinance Company’s Premium Collection:


Out of five microfinance companies that have auctioned their unclaimed right shares, NMB Microfinance (NMFBF) has collected premium of around Rs 3.78 crore from 14,947 unit ordinary shares and 15,870 unit promoter shares. Likewise, Deprosc Development Bank Limited (DDBL) has collected premium of around Rs 1.81 crore by selling 15,970 unit ordinary shares.

  1. Insurance Companies:


Neco Insurance Company Limited (NIL) has earned the highest premium i.e. Rs 8.30 crore among all insurance companies. NB Insurance Company Limited (NBIL) collected Rs 4.45 crore in share premium.

  1. Hydropower’s Premium Collection


Ridi Hydropower Company Limited (RHPC) has collected premium around Rs 1.12 crore by selling unsold 59,384 unit ordinary shares and 14,278 unit promoter shares.

Upcoming auctions upto the end of Asadh 2074:


Till the end of Asadh 2074, 11 more companies will be selling their unsubscribed shares through auction. Above cut off prices are estimated to be 10% less than the current market price.  As per the analysis, Jyoti Bikas Bank Limited (JBBL) and Nepal Bangladesh Bank Limited (NBB) will likely collect more premiums from the auction.

Sijan Bajracharya