1:5 stock split: ₹1 lakh turns to ₹87 lakh in 7 years. Do you own?

Market


A long term investor enjoys some extra return over a short term investors as listed companies announce various rewards for its loyal investors. A company announces such rewards from its capital reserves and the form of reward can be buyback of shares, dividend (whether interim, final or special), issuance of bonus shares, etc. To understand how these rewards can be an attractive offer for a long term investor, one need to look at R & B Denims share price history. In last seven years, this small-cap stock has risen from 2.25 to 39 apiece levels, clocking more than 1600 per cent rise in this period. However, there is a catch. the small-cap stock has traded ex-split in October 2021.

R & B Denims stock split history

The small-cap stock traded ex-split on 28th October 2021 in the ratio of 1:5. This means, a shareholders one stock became five after the stock split as the company went for subdivision of its shares from the face value of 10 per equity share to 2 per equity share.

Stock split impact on investment

If an investor had invested in this small-cap stock in mid-January 2016, he would have got company’s shares at 2.25 apiece. But, after the stock split in 1:5 ratio, one shareholding in the company would have surged five times.

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So, if an investor had invested 1 lakh in this stock, seven years ago, he or she would have got 44,444 company shares. After 1:5 stock split in October 2021, one’s 44,444 shares would have surged to 2,22,220 shares. As R & B Denims share price today on BSE is 39, the absolute value of one’s 1 lakh would have become around 87 lakh today. Provided the investor had remained invested in the scrip till date.

R & B Denims in news

The small-cap company is in news these days for new Air jet Looms — Dobby Machines. It has started to manufacture the prominent luxury level of Denim Fabric with the Width of 85 Inches. It is expected that the company will generate very good margins from the current operating margins with this technology.

The small-cap company delivered steady performance in Q2FY23. Revenues from continuing operations stood at 14711.5 Lakhs, EBITDA at 2337.32 Lakhs. Profit after Tax from continuing business was 1240.60 Lakhs. Despite of the decrease in revenue from Q1 we maintained our profits by focusing on cost reduction, flexible working capital management, and improving productivity and efficiencies.

The small-cap stock is available for trade on BSE only. Its current market cap is 272 crore and its current trade volume is 1,44,550 and around two and half hours of trade is still left on Wednesday session. The 52-week high of this SME stock is 92.45 while its 52-week low is 38.10. So, the stock is available at its 52-week low after retracing from its 52-week high by around 55 per cent.

 


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