1 Stock Split and 1 Stock with Dividend Announcement

The Indian benchmark equity indices witnessed a bloodbath today. The S&P BSE Sensex declined 2.09% or 1,189.73 points ending at 55,822.01. The NSE Nifty50 tanked 2.18% or 371 points settling at 16,614.20. The S&P BSE Midcap index went down 3.42%. The BSE Smallcap index too followed the suit plummeting 3.31%. The broader markets saw heavy selling amid growing concerns of rising Omicron cases, rising inflation, and the possibility of upward rate revision by the RBI. In such falling markets investors should look for stocks that offer regular income in the form of dividends. We have covered two stocks where one company has just announced a stock split and the other has declared a dividend.

1. Ramkrishna Forgings Ltd (NS:RKFO)

Ramkrishna Forgings is a smallcap company with a market capitalization of Rs 2,810 crore. It manufactures iron and steel forgings. The company primarily manufactures components for the automobile industry and its products are also sold to other industries including railways, aerospace, defense, material handling, construction equipment, and mines. In a regulatory filing, the company communicated its intentions for subdivision of its equity shares subject to shareholders’ approval. The board will consider a stock split proposal on January 18, 2022. On the same day, the board will also consider the declaration of the third interim dividend for FY2022 and fix the record date for the same.

What is noteworthy is the fantabulous second-quarter results declared by RFL. The company reported 129.7% year-on-year growth in consolidated net sales amounting to Rs 578.82 crore in the September 2021 quarter. Its consolidated net profit jumped 2,938.6% or 30.38 times to Rs 44.06 crore from Rs 1.45 crore in the second quarter of fiscal 2021. Though it reported a revenue CAGR of 8% for 5-year, its net profit CAGR is in negative territory during the same period. RFL’s return on equity is a mere 7%. Overall, the trend of its past financials doesn’t appear good. The scrip delivered 89.6% in a year and 42.8% in six months. However, its returns are in the negative zone in a month and last five days. FIIs/FPIs increased their holding consistently in the last six quarters. Their stake grew by 1% to 14.77% at the end of the September 2021 quarter.

2. Can Fin Homes (NS:CNFH) Ltd

Can Fin Homes Ltd is a smallcap entity with a market cap of Rs 7,110 crore on December 20? The company provides long-term housing loans to middle and lower-income individuals or corporate bodies for construction and acquiring houses/flats. On December 14, 2021, the company announced that its board has considered and declared an interim dividend of Rs 1.5 per equity share of the face value of Rs 2 each for the FY2022. Can Fin has fixed Friday, December 24 as the record date for the payment of the interim dividend.

In September 2021 quarter, the company reported a 3.7% year-on-year decline in net profit to Rs 123.64 crore. Its total income declined 11% y-o-y to Rs 467.89 crore in the quarter over Q2FY2021. For the year ending March 2021, Can Fin Homes have declared a dividend of 100% amounting to Rs 2 per share? At the current share price of Rs 533.95, it translates into a dividend yield of 0.37%. The company maintains a good dividend track record and has consistently declared dividends for the last five years. In September 2021 quarter, mutual funds and DIIs have marginally raised their holding in the company. Can Fin Homes stock returned 13.4% in a year and 4.6% in six months. However, the scrip's returns trend in negative territory in a month and last five days.