Bullish Charts + 1:1 Bonus Issue: Record Date Coming Soon; Perfect Storm For A Rally?

Sal Automotive is an emerging global producer of agricultural implements, seats, and automotive components. One of the top and most favored suppliers to the Indian automotive sector is SAL. The company Swaraj Automotives Limited (SAL) manufactures seats and seat mechanisms for passenger and commercial vehicles and tractors. Sal Automotive's stock closed Thursday's trading session on the BSE 6.09% higher at Rs 608.50 a share, with a market value of Rs 145.90 Cr, following the Board's announcement of a 1:1 bonus share proposal.

Sal Automotive Bonus Shares

"With a view to share the prosperity with the shareholders, expand the retail shareholders base and increasing the liquidity of the equity shares of the Company, the Board of Directors (the 'Board') at their meeting held on 10th February, 2025, subject to the approval of the members of the Company has approved and recommended a bonus issue of 1:1 One equity share for every One existing equity share held as on the 'Record Date' to be determined by the Board and for the purpose of accommodating the proposed issue of Bonus equity shares, it is required to increase the authorized share capital of the Company," said Sal Automotive in a regulatory filing.

"Accordingly, the Board of Directors of the Company has proposed to increase the authorized share capital from the existing Rs. 3,50,00,000/- (Rupees Three crores and fifty lacs only) divided into 30,00,000 (Thirty lac) equity shares of Rs.10/- (Rupees ten only) each and 50,000 (Fifty thousand) Redeemable Cumulative Preference shares of Rs.100/- (Rupees one hundred) each to Rs. 10,50,00,000/- (Rupees Ten crores and fifty lacs only) divided into 1,00,00,000 (One crore) equity shares of Rs.10/- (Rupees ten only) each and 50,000 (Fifty thousand) Redeemable Cumulative Preference shares of Rs.100/- (Rupees one hundred) each," Sal Automotive further said in a stock exchange filing.

"The bonus shares will be issued by capitalizing Rs. 2,39,77,130/- from the Company's reserves or securities premium account or other permitted reserves, as per the audited financial statements of the Company for the financial year ended 31st March, 2024," Sal Automotive informed stock exchanges.

Sal Automotive Bonus Share Record Date

"The record date for determining the eligibility of shareholders to receive bonus shares will be decided by the Board of Directors after obtaining Members' approval," as per Sal Automotive.

Rationale For The Bonus Issue & Impact On Share Capital

The rationale behind proposing bonus issue is to "reward existing shareholders by increasing the number of shares they hold, to improve the liquidity and affordability of the Company's shares in the stock market and to reflect the confidence of the Board in the Company's future growth and profitability," said Sal Automotive.

"The existing paid-up share capital of the Company as on 10th February, 2025 is Rs. 2,39,77,130/- consisting of 2,39,77,13 equity shares of Rs. 10/- each. After the proposed bonus issue, the paid-up share capital will increase to Rs. 4,79,54,260/- consisting of 47,95,426 equity shares of Rs. 10/- each," Sal Automotive confirmed.

Sal Automotive Bonus Share Allotment

"Pursuant to SEBI (ICDR) Regulations, 2018 and Listing Regulations, 2015, the allotment of shares in bonus issue shall be made only in dematerialized form and thus, in case of members who hold equity shares in dematerialized form, the bonus equity shares shall be credited to the respective beneficiary accounts of the Members with their respective Depository Participant(s) and in the case of Members who hold equity shares in physical form, the bonus equity shares shall be transferred to the Suspense Account opened in this regard, within such time as prescribed by law and the relevant authorities, subject to guidelines issued by SEBI in this regard. No letter of allotment shall be issued to the allottees of newly issued Bonus shares," Sal Automotive highlighted in a BSE filing.

Sal Automotive Share Price Target

"Sal Automotive stock price is bullish on the Daily charts with strong support at 561. A Daily close above resistance of 649 could lead to a target of 755 in the near term," commented A R Ramachandran, Independent Research Analyst.

Disclaimer

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