The stock market regulator has ordered a comprehensive investigation into the abnormal price movement of Bangladesh National Insurance PLC shares, directing the Dhaka Stock Exchange (DSE) to examine the roles of investors, company insiders, stockbrokers and dealers.
The DSE must submit its investigation report within 30 working days, according to an order issued by Bangladesh Securities and Exchange Commission (BSEC) on Monday (October 26).
Bangladesh National Insurance shares stood at 166.4 taka on Monday, marking a surge of around 60% since June 15 and significantly outperforming those of other listed non-life insurers, including companies with stronger financial performance.
The BSEC has directed the DSE to investigate possible coordinated, manipulative or non-genuine trading by investors, including serial trading aimed at artificially inflating the share price.
The probe will also examine possible insider trading involving company directors, employees or other insiders, including the misuse of unpublished price-sensitive information (UPSI).
In addition, the DSE will scrutinise stockbrokers, dealers and their authorised representatives for compliance with margin rules and other regulatory directives, and assess whether they facilitated suspicious trades or failed to prevent them. The investigation will also identify any other violations of securities laws.
Shares of Bangladesh National Insurance PLC, an A-category company listed on both the DSE and the Chittagong Stock Exchange (CSE), have climbed from 48 taka a year ago to nearly 170 taka in September — a gain of more than 250% — raising questions about whether the valuation is justified by the company's earnings.
Its price-to-earnings (P/E) ratio has risen to around 30, compared with a sector average of about 17, indicating that investors are paying substantially more for each taka of earnings than they are for the sector on average.
The valuation also stands out against those of better-performing peers.
Pragati Insurance, which earned 42 crore taka in FY25 with earnings per share (EPS) of 5.31 taka, traded at 69 taka, with a P/E ratio of around 11. Reliance Insurance, which posted a profit of 88.5 crore taka and EPS of 8.42 taka, traded at 91 taka, with a P/E ratio of around 7.
The sharp price surge and valuation gap have fuelled concerns that trading activity, rather than underlying financial performance, may have driven the rally, prompting the BSEC to order an investigation into possible market manipulation and insider trading.
Bangladesh National Insurance PLC's annual profit rose steadily from 17.88 crore taka in FY23 to 18.53 crore taka in FY24 and 21.29 crore taka in FY25. The company declared cash dividends of 20% for FY23, 20% for FY24 and 22% for FY25.
The insurer has a paid-up capital of 44.25 crore taka, comprising 44.25 million outstanding shares, while its market capitalisation stands at around 736 crore taka.