Strong fundamentals of Mirmire Microfinance skyrockets the share price ;NO dividend or right share

The trading of Scrips of Mirmire Microfinance Development Bank Ltd. (MMFDB) in Nepal Stock Exchange started from August 2015. The trading range was set between Rs 96- Rs 288 per unit shares.  In such a short time of four months the price of shares of MMFDB had reached a range of Rs 2300 by hitting  the circuit continuously and has always been in demand.

The shares price of MMFDB has been on a continuous rise, hitting the circuit break every trading day since Mangsir 24, 2072. The LTP on Mangsir 24 2072  stood at Rs 905/unit where as the LTP as of Poush 13 stands at Rs 2129/unit.

Let’s examine reasons behind the rise in the share price of MMFDB.

1. Company Earnings

MMFDB has posted an outstanding net profit rise of 147.51% in the current fiscal year 2072/73. The net profit of the company rose to Rs 27.66 lakh in Q1 up from Rs 11.17 lakh in the corresponding quarter of the previous fiscal year 2071/72. Its the microfinance’s net interest income that has contributed towards its net profit.  Its net interest income surged to Rs. 83.58 lakh up from Rs 5.38 lakh in the corresponding quarter.

2. Fundamentals of Company

Mirmire has a paid up capital of Rs 2 crore and has Rs 1.09 crore in reserve and surplus.

MMFDB’s  annualized EPS now stands at Rs 55.32, its net worth per share stands at Rs 155 while the P/E ratio stands at 9.94 times.

Its non- performing loan (NPL) decreased from 3.70% to 1.70% in the first quarter of the current fiscal year.

3. Higher demand of share

MMFDB has floated its IPO in the month of March 2015 .The shares set aside for retail investors was oversubscribed 378.78 times and those set aside under other category were oversubscribed 185.52 times.  Given the high number of applicants, the allotment took place through a lottery, all investors were eligible for a minimum of 10 shares. Many investors were eager to get shares of MMFDB as it started trading in NEPSE. There was a huge demand for the shares of Mirmire Microfinance during and after the IPO. The lower supply and higher demand has laso contributed to the astronomical rise in the price of share of MMFDB.

One of the main reasons behind the hike of share price of MMFDB is the ongoing rumor regarding the issuance of right shares and also bonus share.

ShareSansar.com asked an Official of Mirmire Microfiannce regarding the right and bonus issue in upcoming AGM scheduled for Poush 25.

Mr. Subash Mani Bastakoti Head of Account ,Credit & Monitoring of Mirmire Microfinanace said, “ Mirmire microfinance will not be issuing any right shares neither will it be issuing the bonus shares.”

Overall, the strong fundamental of the company, low supply and high demand, and to some extent rumors of dividends/rights have skyrocketed the share price of MMFDB.