Penny stock under Rs 5: Price Waterhouse & Co (PwC) to evaluate consolidation proposal for this micro-cap company and acquire zero net debt company!

The company reduced its debt by 66 per cent in less than 24 months.

The stock market on Monday was trading sideways, with the indices moving within a narrow range of 0.15 per cent since pre-opening.

The was one micro-cap speciality chemicals stock was buzzing on the exchange. Here are the details:

The stock name is Vikas EcoTech Ltd.

The Board of Directors of the company considered and granted in-principle approval for evaluating the consolidation proposal of the company with Vrindaa Advanced Materials Limited, a company incorporated under the Companies Act, 1956 and appointed Price Waterhouse & Co LLP (an individual member firm of the network of member firms of PricewaterhouseCoopers International Limited (PwC IL), a Big 4 Advisory Firm for the evaluation of consolidation proposal from tax and regulatory perspective.

Vrindaa Advanced Materials Limited (VAML) is a company that makes speciality polymer compounds and trades in agricultural products. It was founded in 2007 and is headquartered in New Delhi, India. The company has a manufacturing facility in Shahjahanpur, Rajasthan, India. In the financial year ended March 31, 2023, VAML reported a total income of Rs 1925.10 million and net profits of Rs 93.50 million. The company is debt-free and has a positive net worth of Rs 691.40 million.

The board believes that such consolidation would create a larger and stronger entity, subject to statutory, regulatory and other approvals including relevant third-party consents. This will help to pool the experience, expertise, resources and client base of the two companies.

Vikas Ecotech intends to acquire VAML to strengthen its position in the industry and drive out rivals from its operating market. The proposed consolidation will also enable Vikas Ecotech to make strategic investments more quickly and easily than it could on its own.

Established in 1984, Vikas Ecotech Limited is primarily engaged in the business of manufacturing speciality chemicals focused on additives and speciality polymer compounds.

Earlier, the company had set a goal to be a debt-free business by March 31, 2024, and in due compliance with the targeted amount in Phase 1 of the Debt Reduction Program which was initiated in August – September 2021. The company has re-paid Rs 1,052 million to the bankers since then; thus, reducing the total bank debt from the peak of Rs 1612 million approx. to about Rs 550 million currently, making a 66 per cent reduction from the peak level within 24 months of initiating the process.

The stock gave multibagger returns of over 100 per cent in 2 years. Investors should keep an eye on this micro-cap stock.

Disclaimer: The article is for informational purposes only and not investment advice.