1:1 Bonus Issue By Steel Company: Zero-Debt Stock Falls Below Rs 300; Appealing To BUY?

Iron and steel products maker, Surya Roshni Ltd has turned ex-date for its 1:1 bonus issue ratio on Wednesday, January 1. Due to the bonus, this smallcap share price has adjusted to below Rs 300. The company's debt-to-equity ratio is zero, meaning its debt-free. While its return on equity is healthy and price to equity ratio is lower than sector, making it an appealing bet.

Surya Roshni Share Price:

After market hours of January 1, Surya Roshni stock ended at Rs 287, down by 3.5% on NSE with market cap of Rs 6,246.15 crore. The stock's 52-week high and low is adjusted to Rs 307.90 apiece and Rs 233.78 apiece respectively. The stock price stood at Rs 594.65 during its previous session, which is prior to ex-date.

Surya Roshni Bonus Issue:

The steel maker turned ex-date on Wednesday, January 1, which is also the record date to determine the eligibility of shareholders for issuance of the said Bonus Shares.

The bonus issue is in the ratio of 1:1, meaning the stock will reward 1 free share on existing on 1 piece. The company proposed an allotment of 10,88,17,948 Equity shares of Rs 5/- each as bonus shares in the ratio.

The deemed date of allotment is Thursday, January 2, 2025. Earlier, in a years span, Surya Roshni delivered three dividends and a stock split.

Dividends: The company paid about one interim dividend of Rs 2.50 each for FY25 and its record date was on November 29, 2024. It delivered interim and final dividends of Rs 2.50 each with record dates in November 2023 and August 2024. Together, the three dividends are worth Rs 7.50 per share.

Stock Split: The company has split its shares in the ratio of 1:2 with an effective date of October 6, 2023. The face value of Rs 10 each is split to Rs 5 each.

Surya Roshni Recommendation:

As per Trendlyne data, the consensus recommendation from 1 analyst for Surya Roshni Ltd. is HOLD. EPS is expected to grow by 2.6% in FY25. The target price is Rs 603 which was set by IDBI Capital in the pre-bonus case.

Fundamentals of the stock price as per Trendlyne data are --- Price to Earning Ratio is 9.82, lower than its sector PE ratio of 26.34; Stock Price fell 25.56% and underperformed its sector by 50.48% in the past year; Debt to Equity Ratio is zero as the company is debt-free; Return on Equity(ROE) for the last financial year was 15.19%, in the normal range of 10% to 20%; Mutual Fund Holding remained the same in the last quarter at 0.37%; Promoter Share Holding stayed the same in the most recent quarter at 62.96%; Interest Coverage Ratio is 24.38, higher than 1.5, which means that it is able to meet its interest payments comfortably with its earnings (EBIT); and Promoter Pledges are zero.

About Surya Roshni:

Surya Roshni started in 1973 by making Steel Tubes and has grown by leaps and bounds to become one of the largest Steel Pipes and Lighting companies in India. With sales of Rs 7,997 crores in FY 2023-24, Surya Roshni is one of the largest conglomerates in India, with exports to over 50 countries around the world. The Surya and Prakash Surya brands stand for quality, innovation and the latest technology.