Industries to Offload Property for Loan Repayment: Shepherd Edition
Shepherd Industries PLC, a leading Bangladeshi conglomerate, has announced a significant move to sell a plot of land in the Rajuk Purbachal New City Project for Tk7 crore. This sale is part of the company's bid to reduce its mounting debt burden to banks like PNC Bank and US Bank.
For the nine months from July 2024 to March 2025, Shepherd's earnings per share (EPS) stood at Tk0.47, an improvement from a loss of Tk1.18 in the previous year. This positive shift in financial performance is attributed to a net profit of Tk7.16 crore during the same period. However, it's important to note that the land sale is not mentioned as a source of this net profit.
The transaction is expected to generate a profit of Tk3.71 crore. The proceeds from the sale will be used to repay or adjust outstanding loans to banks, particularly the Tk132 crore owed to Southeast Bank, which accounts for a significant portion of Shepherd's total loans to banks, currently standing at Tk164 crore.
The higher payments to creditors, suppliers, and employees during the period resulted in a decrease in net operating cash flows per share for July 2024-March 2025. Despite this, the net asset value per share increased to Tk13.83 as of 31 March 2025, up from Tk13.41 in June 2024. This increase is driven by the net profit mentioned earlier.
Interestingly, the repayment or adjustment of outstanding loans to banks with the proceeds from the land sale is not mentioned as a reason for the increase in net asset value per share. The sale of the land, measuring 10 kathas, 8 chhataks, and 46 square feet, is expected to positively impact Shepherd Industries PLC's gross profit and earnings per share (EPS).
Following the disclosure of the land sale, Shepherd's share price rose by 1.15% to close at Tk17.60. It's worth noting that in FY24, Shepherd incurred a loss of Tk23.30 crore but still paid a 1% cash dividend to shareholders.
The completion of the deal depends on necessary approvals from Rajuk and a no-objection certificate from Southeast Bank PLC. As of now, there are no available search results identifying which bank Shepherd Industries PLC has the largest credit liability with, other than Southeast Bank.
