Small Cap stock jumps after company announces a 1:1 bonus issue; Check the details

With a market capitalization of ₹ 1,624 crores, Vardhman Special Steels is a small-cap stock. The company is engaged in manufacturing billets, steel bars & rods and bright bars of various categories of special and alloy steels. 

It has announced a bonus issue of equity shares to investors in the ratio of 1:1. This means that investors will receive one bonus equity share for every equity share that they hold in the company. The company recently revised the record date for the issue to May 26, 2023. 

At 03:25 PM on Wednesday, its shares were trading at ₹ 405.00 apiece. In the past year, the company’s share price increased by 92 percent from ₹ 210.05 apiece to the current levels, almost giving multibagger returns. 

Vardhman Special Steels has an ideal return on equity of 16.78% and an ideal debt-to-equity ratio of 0.22. Its shares were trading at a price-to-earnings ratio (P/E) of 16.25, which is higher than the industry P/E of 11.96, indicating that it might be overvalued as compared to its peers. 

The company’s promoters hold a 60.71% stake in it followed by retail investors with 31.12%, foreign institutions with 1.14% and mutual funds with 1.03%. 

The company registered a 53.13% decline in its net profit to ₹ 13.68 crores for the January to March quarter (Q4FY23), as compared to ₹ 29.19 crores reported in the corresponding quarter last year (Q4FY22). Its revenue from operations climbed 17.09% to ₹ 427.23 crores in Q4FY23, as compared to ₹ 364.86 crores in Q4FY22. 

For the entire year (FY23), the company’s net profit declined marginally to ₹ 100.45 crores, against ₹ 100.75 crores in the previous year (FY22). Its revenue increased by 26.94% to ₹ 1,773.74 crores in FY23, as compared to ₹ 1,397.35 crores in FY22. 

Written By Simran Bafna 

Disclaimer

The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.