One Stock with Bonus Issue and One Rights Issue Announcement

  • Stock Market Analysis

Benchmark equity indices nosedived on December 6 as investors were wary of the increasing omicron cases, rising inflation, and RBI’s monetary policy meet on Wednesday, December 8. Sensex slumped 949 points or 1.65% and settled at 56,747.14. Nifty too tanked 1.65% to close at 16,912.25. Two companies operating in the smallcap space have announced bonus share issues and rights share issues. Let’s take a look.        

1. Kewal Kiran Clothing Ltd

Kewal Kiran Clothing Ltd (NS: KKCL ) manufactures clothing such as men's jeans, shirts, T-shirts, jackets, and trousers. On October 28, 2021, the company’s board approved a proposal for a bonus share issue in the proportion of four equity shares of Rs 10/- each for every one equity share of Rs 10/- each held. It has set Friday, December 17, 2021, as the record date. KKCL reported a fantastic second quarter FY2022. The company’s consolidated total income from operations stood at Rs 175.08 crore, up 159.3% year-on-year from Rs 67.48 crore in Q2FY2021. Net profit remained at Rs 27.02 crore, up nearly three times from Rs 9.16 crore in the second quarter of fiscal 2021. Its net cash flow from operating activities grew almost twofold at Rs 96.71 crore from Rs 50.94 crore in Q2FY2021. The scrip has returned 58.2% in a year compared to 63.07% by Nifty Smallcap 250.

KKCL

The stock delivered 51.6%, 42.5%, and 6.5% returns on a year-to-date, six months and one-month basis. During the same period, the index delivered 54.7%, 14.9%, and negative 2.92% respectively. While promoters’ holding remained unchanged in September 2021 quarter, FIIs/FPIs marginally upped their holding in the company. The scrip appears attractive based on key technical indicators such as RSI, MACD, and 10-day/20-day/30-day/50-day/100-day/200-day EMA. On December 6, the stock closed at Rs 1278 representing a discount of 5.2% to its 52-week high. 

2. Shivam Autotech Ltd

Shivam Autotech Ltd (NS: SHAU ) is a smallcap company that manufactures automobile parts that includes transmission gears and spline shafts. On November 25, 2021, the company’s board approved the terms and conditions of the rights issue. The rights issue is priced at Rs 18 per share including a premium of Rs 16 per share amounting to Rs 40 crore. It has set the right entitlement ratio as 2 rights equity shares for every 9 equity shares held by eligible shareholders on the record date which is set as Friday, December 10, 2021. The scrip returned ~22% in a year, 28.1% year-to-date, 3.7% in six months 1.9% in a month, and 5.5% in five days. On a standalone basis, SAL’s total income from operations declined by 2.5 crores to Rs 130.09 crore in Q2FY2022 from 132.5 crores in Q2FY2021. The company reported a net loss of Rs 8.79 crore in the quarter compared to a net profit of Rs 1.44 crore in the second quarter of fiscal 2021. The huge size of the net loss in the second quarter when the economy is under a recovery mode doesn’t augur well for the company. Promoters and mutual funds holding in SAL remained unchanged in September 2021 quarter.
SAL

The scrip has a mixed-signal based on key technical parameters. While it doesn’t look good from RSI and MACD indicators, 10-day/20-day/30-day/50-day/100-day/200-day EMA appears favorable for the scrip. The stock ended at Rs 26.65 and traded at a 2.7% discount to its 52-week high.  

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  • prasanta sahoo @prasanta sahoo
    thanks sir, Such analytical post🙏
    Like 0
  • Bipinchandra Mahale @Bipinchandra Mahale
    thank you sir for giving such a valuable info
    Like 0

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