Multibagger stock with 596% returns announces a 1:2 stock split; Check the details

Shares of company opened 5 percent higher and hit the upper circuit on Friday after the company announced a stock split/ sub-division of its equity shares. They were locked at ₹ 93.05 apiece on the National Stock Exchange (NSE). 

Servotech Power Systems LED manufactures lighting solutions, UPS (uninterruptible power supply) systems, inverters, and batteries. Its products include electric vehicle chargers as well as solar inverters and batteries. 

The NSE-listed company informed that its board of directors have approved the sub-division of its equity shares in the ratio of 1:2. Therefore, each share having a face value of ₹ 2 will be divided into two shares having a face value of ₹ 1 each. 

The rationale behind the split is to enhance the liquidity of the company’s shares and to encourage wider participation in the stock market. 

Servotech Power Systems has delivered multibagger returns of 596 percent in the past year, as its share price increased from ₹ 13.37 to ₹ 93.05. Therefore, if an investor had invested ₹ 1 lakh in the company’s shares one year ago, the value of their holdings would have been ₹ 6.96 lakhs today! 

The company reported a multi-fold increase in consolidated net profit for the March quarter of financial year 2022–23 (Q4FY23) at ₹ 6.05 crores, as compared to ₹ 1.3 crores recorded in the same quarter a year earlier. Its revenue climbed to ₹ 120 crores in Q4FY23 as compared to ₹ 51.10 crores in the corresponding quarter a year ago. 

For the entire year (FY23), it reported its profit rose to ₹ 11.06 crores from ₹ 4.05 crores in the previous year (FY22). The company’s revenue increased to 278.64 crores in FY23, as compared to 144.25 crores in FY22. 

With a market capitalization of ₹ 943 crores, Servotech Power Systems is a small-cap stock. The company has an ideal return on equity of 17.19 percent and an ideal debt-to-equity ratio of 0.51. Its shares were trading at a price-to-earnings ratio (P/E) of 83.95. 

Written by Simran Bafna 

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