1:10 Stock Split: Steel Stock Hits 5% Lower Circuits, To Turn Ex-Split Soon

Indian Link Chain Manufacturers touched 5% lower circuit on Tuesday after the company announced a shares split in the ratio of 1:10. Also, the stock is in focus due to key changes made in the company's top management. Indian Link shares erased their Rs 1,500 mark in the early trade.

At the time of writing, Indian Link shares traded at Rs 1496.20 apiece, down by Rs 78.70 from the previous closing on BSE. In percentage terms, this would be the stock's 5% lower circuit.

A lower circuit generally means that there are several sellers in a company's equity share with no buyers.

The company has a market cap of Rs 7.48 crore.

On October 1, in its regulatory filing, Indian Link Chain said, "the shareholders of the company at the 65th Annual General Meeting, have approved Alteration in the capital of the Company by sub-division/split of existing equity share of the Company from one equity share having face value of Rs 100 each, fully paid-up into Ten equity shares having face value of Rs 10 each fully paid-up."

The record date for turning ex-split is yet to be announced.

Typically, listed companies declare a stock split of already owned shares into much smaller shares. This is done to improve liquidity by breaking the shares into smaller sizes. The face value of the shares reduces in proportion to the split ratio, however, there is no impact on the company's share capital and reserves. Although the price value of a stock reduces in a stock split, it the number of shares held rises in the investors' portfolio of that specific stock.

Apart from this, the company's board appointed Vishal Thakkar as the Managing Director and Chief Financial Officer with immediate effect. However, at the same time, two non-executive independent directors namely Nagesh Tiwari and Balkrishna Ramavatar have resigned.

In its SWOT analysis for India Link Chain, ICICI Direct highlighted the strengths of the company which are -- that it has zero debt, and zero promoter pledge. Also, the company's price is above short, medium and long-term moving averages.

Among the weaknesses, ICICI Direct highlighted --- inefficient use of capital to generate profits - RoCE declining in the last 2 years; inefficient use of shareholder funds - ROE declining in the last 2 years; and inefficient use of assets to generate profits - ROA declining in the last 2 years.

Mumbai-based Indian Link Chain Manufacturers is engaged in the business of manufacturing Steel Link Chain and Sulphuric Acid. The companys 2880 MT Chain works facility is located at Bhandup, Mumbai and the chemical factory, which can produce 41250 MT of Sulphuric Acid is situated at Bolsar, Thane.

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