Daffodil Computers surges 308% in five months despite weak earnings, no PSI

Shares of Daffodil Computers PLC have surged more than 308% over the past five months despite weak financial performance and the absence of any price-sensitive information (PSI), raising concerns over the stock's valuation and trading pattern.

According to data from the Dhaka Stock Exchange (DSE), the company's share price climbed from Tk41.80 on 8 February to Tk170.60 on 9 July, marking a 308.13% gain during the period.

Despite the steep rally, Daffodil Computers did not disclose any PSI that could explain the price movement. The DSE sought explanations from the company twice over the unusual rise in its share price. On both occasions, the company said it had no undisclosed price-sensitive information.

The company's financial performance also offers little support for the sharp appreciation.

According to its unaudited financial statements for the January-March quarter of 2026, Daffodil Computers reported revenue of Tk9.43 crore and a net profit of Tk23 lakh. Earnings per share (EPS) stood at Tk0.05, while net asset value (NAV) per share was Tk13.41. The company attributed the earnings decline to lower sales during the quarter.

Even so, sustained buying interest continued to push the stock higher, driving its price-to-earnings (P/E) ratio to 511.8 – one of the highest among companies listed on the country's capital market.

A P/E ratio above 500 means investors are paying more than Tk500 for every Tk1 of the company's earnings, a level that market analysts say is difficult to justify unless there are strong expectations of exceptional future profit growth.

The company had earlier announced plans to issue 32.69 million ordinary shares at Tk15 each to repay a loan from Creative International and sought shareholder approval through an extraordinary general meeting (EGM). 

However, on 21 May this year, the Bangladesh Securities and Exchange Commission (BSEC) declined to approve the proposed Tk49.04 crore share issuance.

In recent months, both the BSEC and the DSE have voiced concerns over sharp price increases in fundamentally weak stocks. The regulator has instructed the stock exchanges to strengthen market surveillance and investigate unusual trading activity where share prices rise significantly without any apparent reason.

Market analysts said Daffodil Computers' price movement appears disconnected from its financial fundamentals. They argued that, in the absence of any significant business development or material disclosure, such an extraordinary rally warrants closer regulatory scrutiny and raises concerns about possible market manipulation.

They also questioned why no visible regulatory action has been taken so far, noting that only the regulator can explain the absence of enforcement if irregularities are found.

Analysts advised investors not to chase rapidly rising stocks without assessing a company's earnings, asset value, financial health and long-term business prospects, warning that investments in heavily overvalued shares carry a high risk of significant losses.