Rs 8/Share Dividend; Chemical Stock In Focus This Week; Turned Rs 50,000 To Rs 9.5 Lakh In Longest Run

A small-cap stock, Sukhjit Starch & Chemicals will be in focus during the trading week from January 15th to 20th as its stock price will trade ex-dividend for a dividend payout to the tune of 80%. Sukhjit is currently moving closer to its 52-week high and has an all-time gain of 1,815%. The stock has turned a mere Rs 50,000 investment into a corpus of over Rs 9.5 lakh in the longest run.

As per the regulatory filing, Sukhjit announced the payment of an interim dividend of 80% aggregating to Rs 8 per share on a face value of Rs 10 each for the financial year 2023-24.

The record date for the dividend payout has been revised to January 15th from earlier January 14th. The said Interim Dividend shall be paid within 30 days from the date of declaration to those shareholders of the Company whose names appear in the records of the Company, as
on the said Record Date.

Accordingly, Sukhjit shares will turn ex-dividend on January 15th as well.

Should you buy Sukhjit's share price? VLA Ambala of SMT is bullish on the stock price, The Sebi-registered analyst recommends fresh buying in the range of Rs 565 to 580 on the stock price for a target price of Rs 610 to 850 with a stop loss of Rs 515. She suggested the holding-time of the stock to be from 3 weeks to 5 months.

Sukhjit has a good track record of paying hefty dividends for the past five years. In 2022 alone, the company paid two interim dividends of Rs 8 per share for FY23 and Rs 10 per share. Since 2022, the company has been paying huge dividends compared to the dividend payout of Rs 3 per share and Rs 2 per share in 2021 and 2020 respectively in the post-pandemic era.

Also, since August 2002, the company has declared up to 24 dividends, as per Trendlyne data.

At present, the stock price has a dividend yield of 1.36% on the current market price.

On BSE, Sukhjit's share price ended at Rs 590.70 apiece, up by 0.94% with a market cap of Rs 922.79 crore. The stock is just a few rupees away from hitting its 52-week high mark of Rs 596.80 apiece and it will be keenly watched if the stock crosses this level during its dividend record date.

In a year, Sukhjit's share price has gained by 32% on BSE, while in 5 years the stock emerged as a multi-bagger with gains of up to 152.34%. Meanwhile, the stock's all-time gains have been a breathtaking 1,813.55% since mid-1995.

In the long run, investors who bought Sukhjit's shares in mid-July of 1995 for Rs 50,000, their investment value has risen to over Rs 9.56 lakh as of now.

Sukhjit is yet to declare its Q3 earnings report for FY24. However, in Q2FY24, the company posted a net profit of Rs 13.66 crore, compared to a net profit of Rs 13.04 crore in Q1FY24 and Rs 18.52 crore in Q2FY23. Total Revenue was also lower to Rs 322.85 crore in Q2FY24 versus Rs 324.28 crore in Q1FY24 and Rs 343.68 crore in Q2FY23. Sukhjit said, the company has successfully maintained its Revenue from Operations during Q2 FY24 despite the 15-day Annual Maintenance Shutdown at its largest manufacturing facility, which accounts for approximately 40% of total manufacturing capacity in Phagwara, Punjab.

Sukhjit has stated that it will persist in its endeavours to enhance its product portfolio, with a focus on advancing its operating margins in the upcoming quarters.

While Sardana, Managing Director on November 1, 2023, said that looking ahead, Sukhjit is exploring avenues for expansion, considering both Greenfield projects and the acquisition of existing brownfield facilities, contingent upon market dynamics and internal assessments. Furthermore, the company is prudent in its market entries, planning to diversify into new product segments once it ascertains the demand visibility for these offerings. With a resilient resilient foundation and a forward‐looking strategy, Sukhjit is poised to harness emerging opportunities and drive sustainable growth in the years to come.

Sukhjit Starch & Chemicals Ltd, incorporated in 1943, is an agro‐processing company that specializes in the production of starch and its derivatives. Sukhjit's diverse product portfolio includes Starch, Dextrines, Liquid Glucose, HMS, Malto‐Dextrin, Mono‐Hydrate Dextrose, Anhydrous Dextrose, Sorbitol‐70% Solution and various by-products, catering to a wide spectrum of Industries. The products are used in diverse industrial and commercial applications such as food & beverages, paper & board,
personal care & pharmaceuticals, textiles, FMCG, animal and pet foods, etc.

As per Trendlyne data, Sukhjit's Debt to Equity Ratio of 0.69 is less than 1 and healthy, implying that its assets are financed mainly through equity. Also, its Return on Equity(ROE) for the last financial year was 13.61%, in the normal range of 10% to 20%. Further, Price to Earning Ratio is 18.38, lower than its sector PE ratio of 49.26. Lastly, the Interest Coverage Ratio is 5.31, higher than 1.5, which means that it can meet its interest payments comfortably with its earnings (EBIT).

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.