Small Cap Stock Declares Rs 8/Share Dividend After 11 Months of Listing: Buy?

A small-cap firm in the capital goods industry is Uniparts India Ltd. Global manufacturer of engineered systems and solutions, Uniparts is headquartered in India. With six manufacturing plants and four warehouse locations spread across the US, Europe, and India, the Group is the leading manufacturer of systems and components for the off-highway industry, and its products are sold in 25 countries.

The firm is a major provider of systems and components for the off-highway industry in the agricultural, construction, forestry & mining (CFM), and aftermarket sectors. Following an 11-month listing period, Uniparts India announced a significant interim dividend of Rs 8 per share for FY24. The company's shares became public on December 12, 2022.

Uniparts India Dividend

"We wish to inform you that in terms of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors of the Company at its meeting held today i.e., November 9, 2023, have interalia approved declaration of first interim dividend for FY 2023-24 of Rs. 8 per equity share of face value of Rs. 10 each i.e., 80% on the Equity Share Capital of the Company and fixed November 24, 2023, as the Record Date for determining the shareholders who will be entitled to the said dividend. The interim dividend shall be paid to the eligible shareholders within 30 days from the date of declaration," said Uniparts India in a stock exchange filing.

Uniparts India Q2 Results

On a standalone basis, the company reported revenue from operations of Rs 186.42 crore in the September 2023 quarter down 25.46% from Rs. 250.11 crore in the September 2022 quarter. It reported a net profit of Rs. 13.46 crore in Q2FY24 down 48.97% from Rs. 26.38 crore in Q2FY23. EBITDA for the firm decreased 40.59% from Rs. 43.07 crore in the same quarter last year to Rs. 25.59 crore in the quarter under review.

Uniparts India Share Price Target

Mandar Bhojane - Equity Research Analyst at Choice Broking said "The current trading price of UNIPARTS is Rs 548. The stock is exhibiting a bearish trend on the daily chart, characterized by lower highs and lower lows, indicating a potential downtrend. The price appears to be consolidating within a range of Rs 600 to Rs 500, suggesting a sideways movement. If the stock manages to close above the Rs 600 level, it could signal a potential bullish reversal with near-term targets at Rs 660 and Rs 720. Conversely, immediate support levels are identified at Rs 530."

"Key technical indicators reinforce the bearish outlook. The Relative Strength Index (RSI) is currently at 39.45, indicating a downward trend. Additionally, the Stochastic Relative Strength Index (Stoch RSI) recently experienced a negative crossover, further supporting the bearish sentiment. To prudently manage risk, it is advisable to exercise caution if the stock falls below the Rs 500 level, as this is considered a crucial support level. This precautionary measure helps protect investments in the event of an unexpected market reversal," the analyst added.

"On the flip side, a breakout above the Rs 600 level could lead to further upward momentum, targeting levels of Rs 660 and Rs 720 in the short run. Investors should closely monitor price movements and key technical levels to make informed decisions and adjust their strategies accordingly," Mandar Bhojane stated.

Disclaimer

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