Unlocking Value: Small-cap multibagger stock issues preferential allotment at a premium and announces a game-changing demerger in ratio of 1:3

Revenues had surged by a whopping 66 per cent YoY to reach Rs 805 crore, and the net profit had made a substantial leap from Rs 14 crore to Rs 22 crore during the same period.

In the tumultuous world of financial markets, where indexes were plummeting over the past few trading sessions, a sudden twist of fate has brought a glimmer of hope. Major indexes defied gravity, surging by more than 1 per cent in the last trading day of the week. The recent fall was like a dark cloud caused by the decline in US markets and the worsening Middle East conflict. It left investors on edge, uncertain about the future.

One of the primary culprits of this turbulence was the looming specter of elevated inflation in the United States, threatening to push interest rates higher. The pulse of Wall Street and the intricate dance of geopolitical affairs were conducting a symphony of uncertainty that left traders and investors spellbound. The question on everyone's mind was, "What's next?"

Amidst this financial tempest, an intriguing subplot unfolded – Texmaco Rail & Engineering Ltd, a seemingly Small-Cap company with a market capitalization of Rs 3,972 crore and a stock price of Rs 123 per share, made a surprising move. It decided to issue preferential shares, and the terms of this offering were nothing short of astonishing.

Texmaco Rail allotted 27,02,700 equity shares to Adventz Finance Private Limited for a cash consideration of a staggering Rs. 39,18,91,500. Additionally, 6,75,675 equity shares were issued to Shri Saroj Kumar Poddar for a significant cash consideration of Rs. 9,79,72,875. The issue price for these preferential shares stood at Rs. 145 per share. What's remarkable is that this issuance took place well above the current market price, resulting in a premium of nearly 18 per cent. It's a financial maneuver that left analysts and investors alike raising their eyebrows.

But that's not all; Texmaco Rail & Engineering Ltd had more surprises up its sleeve. Over the last year, its stock had taken investors on a wild ride, surging by over 160 per cent, making it a multibagger sensation. And now, they had announced a demerger – a strategic move that added another layer of intrigue.

The company had also unveiled its earnings report for the quarter ending September 2023, and the numbers were nothing short of impressive. Revenues had surged by a whopping 66 per cent YoY to reach Rs 805 crore, and the net profit had made a substantial leap from Rs 14 crore to Rs 22 crore during the same period.

And then, the pièce de résistance – the demerger. The Texmaco Rail board had approved a demerger between Texmaco Rail & Engineering Ltd and Belgharia Engineering Udyog Pvt Ltd. This move would result in the segregation and transfer of the Infra – Rail & Green Energy Division into Belgharia Engineering, while other divisions would remain with Texmaco Rail. Shareholders would receive 1 equity share of Belgharia for every 3 equity shares of Texmaco Rail they held. A record date soon to be announced, marking a pivotal moment for the company and its investors.

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