1:1 Bonus Issue After 8 Years: Not ITC, But This Tobacco Company To Reward 1 Free Share; Attractive To Buy?

One tobacco company has declared a fresh bonus issue after 8 years. This company is listed on both BSE and NSE, while trades below Rs 200 currently. It is not cigarette giant, ITC Ltd. Instead, a penny stock engaged in the same field will reward investors 1 free share on existing one piece. The name is Kothari Products, and the stock is currently nearing its 52-week high.

Kothari Products Share Price:

After market hours of January 3, the stock price stood at Rs 197.05 apiece, up by 0.8% on BSE. The stock was near its 52-week high of Rs 227.35 apiece, while traded higher from its 52-week low of Rs 111.15 apiece. Its market cap is currently at Rs 588.07 crore. In the trading week from December 30th to January 3rd, the stock has dipped by 3.4%. In a month, though it has gained by over 17%.

In a year, Kothari is up by 23%.

Kothari Products Bonus Issue:

Kothari has announced a 1:1 bonus issue, which will be delivered from its free reserves created out of profits. The record date will be announced in due course.

The company will use up to Rs 29,84,38,650 for free reserves for implementing its bonus issue. Its pre-bonus authorized capital is about Rs .31,50,00,000/- & bonus Issue Authorized Capital wi II be Rs.61,50,00,000.

This will be Kothari's second bonus issue after an 8-year gap. The company has already delivered two more bonus shares. The first bonus issue was 2:1, and its ex-date was March 28, 2014. The second bonus issue was 1:2, with an ex-date of January 5, 2016.

The upcoming 1:1 bonus issue is Kothari's third reward.

Prior to the bonus issue, Kothari delivered dividends; however, it has paid no such rewards since COVID-19. The last dividend payout was Rs 1 in September 2019, followed by Rs 1.50 per share in September 2018.

Kothari has never carried stock split up till now.

Kothari Products Share Attractive?

As per Trendlyne data, the key positives for Kothari Products' share price are --- Quarterly Revenue rose 0.04% YoY to ₹272.05 Cr. Its sector's average revenue growth YoY for the quarter was 8.07%; Debt to Equity Ratio of 0.07 is less than 1 and healthy, which implies that its assets are financed mainly through equity; Mutual Fund Holding remained the same in the last quarter at 0%; Interest Coverage Ratio is 4.59, higher than 1.5, which means that it can meet its interest payments comfortably with its earnings (EBIT); and Promoter Pledges are zero.

Further, the drawbacks for the stock are: The Price-to-Earning Ratio is -6.18, which is negative; the Stock Price rose 46.83% and underperformed its sector by 26,190.77% in the past year; Quarterly Net profit fell 27,400% YoY to ₹120.12 Cr. Its sector's average net profit growth YoY for the quarter was 43.33%; and the Debt-to-Equity Ratio of 0.07 is less than 1 and healthy, which implies that its assets are financed mainly through equity.

About Kothari Products:

Kothari Products Ltd., a flagship company of the Group is a public limited company which was incorporated on 17th September 1983 and has a reasonable stake holders' base. Its shares are being traded in the stock exchange Mumbai and the National Stock Exchange.

Kothari Products Ltd. has ventured into the Import Export Trade of various products/commodities including Agro based commodities, Minerals, Metals, Petroleum products and Coal, Tiles, Notebook, Computer Storage Devices, Computer Hardware, Electronic Components, Transformers, Copier Paper, Steel, Scrap and PVC, etc.

The Company has also incorporated its Foreign subsidiary in Singapore for "General Whole Sale Trade (including General Imports & Exports)" in addition to a Domestic subsidiary to pursue the business of International Trade vigorously and profitably. The company has competent and motivated human resources, best in trade to look after the gambit professionally and profitably.