2 Stocks with Split Announcements to Keep Track

Stock splits are always meant to make the share affordable to retails and invite wider public participation in a company’s shareholding. However, there are few companies that declare splits despite the lower price of their stocks. Investors should be very careful before buying any stock merely on the news of a split. We have come up with two companies that have recently announced a stock split.

1. Greenlam Industries Ltd (NS:GEEN)

Greenlam which manufactures laminates in a BSE filing on November 25 informed about a board meeting on December 13 to discuss the stock split. On December 13, the board approved a stock split in the ratio of 5:1. It means each old equity share with a face value of Rs 5 will get converted into a new equity share with a face value of Rs 1. The scrip closed at Rs 1,684.95 on December 13, up 0.14% as the news had already got discounted when the stock soared 18% on November 26. On that day, Greenlam, in a regulatory filing announced its intention to split the stock.

In September 2021 quarter, the company reported total income at Rs 429.06 crore, up 60.6% year-on-year from Rs 267.23 crore in Q2F2021. Operating profit jumped 27.56% to Rs 32.76 crore from Rs 25.68 crore in the year-ago quarter. Its profit after tax grew 29.3% to Rs 21.71 crore from Rs 16.79 crore in September 2020 quarter. Greenlam’s revenue and net profit CAGR don’t look good for a 3-year and 5-year period. However, its return on equity CAGR during the same period remained 17% and 18% respectively.

Promoters’ shareholding in September 2021 quarter came down by 1% to 53.9% on a sequential basis. The same is the case for DIIs and mutual funds where holding marginally declined. However, FIIs/FPIs raised their stake in the company by 0.22% in the quarter. The scrip has returned 110.6% in a year, ~115% in year-to-date, 40.5% in six months, 19.5% in a month and 13.3% in the last five days. Greenlam shares trade at a 4.5% discount to its 52-week high of Rs 1,765.

2. Shree Ganesh BioTech India Ltd (BO:SHGB)

Shree Ganesh Biotech India provides agricultural chemicals. The company offers seed, fertilizer, and other agricultural products. The company’s board has decided to meet on Monday, December 20 to approve the stock split. The board is likely to approve a 10-for-1 stock split. It means a sub-division of the face value of one old equity share of Rs 10 into ten equity shares with a face value of Rs 1 each.

The company reported a net profit of Rs 0.82 crore in the second quarter of fiscal 2022 as against a net loss of Rs 0.04 crore in the corresponding quarter of FY2021. Net sales in September 2021 stood at Rs 17.96 crore. Although SGBIL’s 3-year revenue CAGR came at 30%, its net profit CAGR runs in the negative zone. The company’s return on equity CAGR too is very dismal at 2% for a 3-year period and 6% for a 5-year period. The stock soared 82.3% in a year, 66.7% in year-to-date, 62.9% in the last six months, 26.9% in a month and 25.8% in the last five days.