Which listed firms await Ramadan boost?  

Infographic: TBS

With the virtuous cycle of increased income, spending, and giving, the month of Ramadan ahead of Eid-ul-Fitr significantly contributes to the economy, business turnover, and profits.

Analysts at capital market services group CAL Bangladesh looked into the impacts of Ramadan and Eid sales on the listed firms' profits, and they found listed footwear and consumer electronics companies to be the most benefited businesses during the major festival.

For instance, Eid-ul-Fitr alone accounts for one-third of the annual footwear sales in the country, and the seasonal sales helped Bata Shoe Bangladesh grow its earnings per share (EPS) to Tk19.41 in the quarter of Eid-ul-Fitr last year, up from Tk5.01 in the previous quarter.

Apex Footwear nearly doubled its quarterly EPS during the festival last year to Tk5 from Tk2.8 in the previous three months.

The positive seasonal impacts should be repeated every year as long as there are no extraordinary events, according to CAL analysts.

Apparel sales and food consumption top all other segments in the season with Tk14,450 crore and Tk11,000 crore in estimated turnover, respectively, due to the culture of buying good foods over the holy month of Ramadan and new apparel and footwear for every family member ahead of Eid-ul-Fitr.

Around 43.4% of the annual domestic apparel sales of apparel takes place ahead of this Eid, estimates CAL based on industry data.  

"However, most of the listed companies in the textile sector primarily focus on the export market, which limits the benefits for these companies during the festive season," said Chartered Financial Analyst Ahmed Omar Siddique, head of research at CAL Bangladesh.

The two Eid festivals – Eid-ul-Fitr and Eid-ul-Adha, which comes 70 days later – boost the income of service holders due to the annual bonuses, and they tend to use the income to buy consumer durables.

Around 60% of the sales for Walton Hi-Tech Industries come in the four months starting with Ramadan and ending after Eid-ul-Adha, according to its Executive Director Mohammad Shahjada Salim.

CAL found nearly 37% of Walton's sales came in the Ramadan quarter last year, compared to 30% for its major competitor Singer.

Due to the depreciation of the taka and the soaring costs of raw materials, 2022 was a bad year for electronics and home appliance makers. Walton still posted some quarter-on-quarter growth in the Ramadan quarter. EPS rose from Tk12.3 to Tk13.1, while the growth was much higher in 2021 – to Tk19.9 during the Ramadan quarter from Tk12.9 in the previous three months.

Food product sales peak in Ramadan, but due to a lack of clarity, CAL could not name Ramadan beneficiaries among the listed food companies.

Consumption during Ramadan and Eid-ul-Fitr is estimated to be around Tk1.26 lakh crore, which represents about 3.2% of the annual GDP, said Omar Siddique, adding that the increased flow of money also helps the self-employed people earn and spend more during the season.

The transportation sector generates a Tk3,000 crore turnover during Ramadan and Eid-ul-Fitr, and there are no such companies in the stock market to claim their revenue shares.

Amid a higher remittance inflow, banks remittance wings enjoy better turnover while the overall increase in circulation of money due to more businesses spending and giving mobile financial services gets a boost.

Dilip Kajuri, deputy managing director of Apex Footwear, was less excited about the festival sales this year as Ramadan sales have yet to pick up as fast as they did over the same days last year.

Except for some big outlets in urban locations, footfall had yet to live up to his expectations, and the slow growth was more concentrated in outlets in the countryside, he said.

Of course, sales were increasing ahead of Eid compared to the last quarter, but they were still slower than the previous Ramadan, he said, blaming higher consumer inflation.