1:5 Stock Split: Multibagger Smallcap Stock In Focus Ahead Of Ex-Split; 320% Returns In 5 Years

Packaged foods company, ADF Foods stock price is in focus ahead of turning ex-split on Monday. The company will be sub-dividend equity shares in the ratio of 1:5. The stock currently trades over the Rs 1,100 mark.

As per the regulatory filing, the company fixed September 11 as the record date for determining the eligibility of shareholders for the purpose of sub-division / split of existing equity shares in the ratio of 1:5.

Simply put, one existing equity share having a face value of Rs 10 will be subdivided into five equity shares having a face value of Rs 2.

At the time of writing, on Friday, the stock traded at Rs 1105.35 apiece marginally down from the previous closing of Rs 1108.10 apiece on BSE. The stock ranged from Rs 1130.80 apiece to Rs 1130.80 apiece during the day. Its market cap is nearly Rs 2,4249 crore.

In six months, ADF Foods has given nearly 52% returns, while its year-to-date upside is over 44.5%. But in 5 years, the stock has emerged as multibagger with gains of nearly 323% on BSE till now.

In general terms, a stock split means that already owned equity shares are subdivided into smaller shares. This is usually done to improve Liquidity by breaking it into smaller sizes and also making the stock available for retail investors at an affordable price. The face value of a stock price also reduces in proportion to the split ratio.

During the June 2023 quarter, ADF Foods reported a standalone revenue of Rs 84.6 crore registering a growth of 17.2% on a y-o-y basis. EBITDA stood at Rs 21.1 crore, with a margin of 24.9% - increasing by 189.3% y-o-y. PAT grew on a yearly basis by 121.0% to reach Rs 16.4 crore at a margin of 19.3%.

On the consolidated front, the Q1FY24 grew by 15.7% to Rs 112.4 crore y-o-y while EBITDA and PAT grew by 141.4% to Rs 21.9 crore and 92.7% y-o-y Rs 14.7 crore respectively.

Also, in the quarter, the company's core business of Processed and Preserved Foods saw margin improvement on both y-o-y and q-o-q basis. Revenue from Distribution business saw a 29% and 40% growth on quarterly and yearly basis respectively

Trendlyne on its website describes ADF Foods as an expensive star which means stocks with high durability and momentum scores (above 50-55) and expensive valuation (less than or equal to 30 in valuation score). These stocks are considered high performers that are however expensive at their current price. Click to see classifications.

The stock's MFI and RSI are in the mid-range of 67.4 and 54.1 respectively. While 1-year beta is at 1.31% which means very high volatility.

ADF is a consumer-focused Company and a leader in prepared ethnic food offering frozen foods, ready-to-eat (RTE) items, ready-to-cook (RTC) items, sauces, pickles, pastes and dips under its 8 brands. It manufactures, distributes, and markets Indian food along with organic Mexican and natural meat alternative foods. The Company's products are available in over 55 countries through a strong distribution network across the US, Canada, Europe, Australia, Asia and the Middle East.