10:1 Stock Split: Multibagger Textile Stock to Keep Under Radar as Company Considers Proposal of Merger & Investment in Equity Share Capital of Evincea Renewable Two Pvt Ltd
The stock is up by 41.5 per cent from its 52-week low of Rs 72 per share and gave multibagger returns of over 1,000 per cent in 5 years.
On Monday, shares of Sportking India Limited plunged 0.30 per cent to Rs 100.55 per share from its previous closing of Rs 100.85 with an intraday high of Rs 101.95 and an intraday low of Rs 96.50.
Sportking India Ltd, a textile company within the Sportking Group, manufactures a wide range of yarns (cotton, synthetic, and blended), fabrics, and garments. Their yarn offerings include 100 per cent cotton, polyester/cotton blends, fancy yarns, dyed yarns, and even acrylic and acrylic/polyester blends. The company has a market cap of over Rs 1,200 crore.
According to Quarterly Results, the net sales increased by 3.7 per cent to Rs 651.65 crore and net profit increased by 61.4 per cent to Rs 25.02 crore in Q2FY25 compared to Q2FY24. Looking at half-yearly results, the net sales increased by 10.2 per cent to Rs 1,285.69 crore and net profit increased by 68.8 per cent to Rs 56.85 crore in H1FY25 compared to H1FY24. In its annual results, the net sales increased by 7.8 per cent to Rs 2,377.14 crore and net profit decreased by 46.7 per cent to Rs 70.35 crore in FY24 compared to FY23.
The Board of Directors, after careful consideration and recommendation from the Audit Committee, has given its preliminary approval to the merger of Marvel Dyers and Processor Private Limited and the manufacturing facilities of Sobhagia Sales Private Limited into Sportking India Limited. KPMG has been appointed as an advisor to evaluate this merger proposal and provide recommendations to the Board. This merger will facilitate forward integration into the manufacturing and sale of processed/dyed knitted fabrics and garments, adding value and expanding Sportking India's operations within the textile product chain. Additionally, it will enhance organizational capabilities through the pooling of human capital, streamline administrative processes, and improve operational efficiencies.
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Additionally, the Board of Directors has given its preliminary approval for a 26 per cent equity investment, amounting to Rs. 12.09 crore, in Evincea Renewable Two Private Limited, a special purpose vehicle (SPV) focused on solar power supply. This investment is intended to support the commissioning of a 40.3 MW solar power plant, which will supply electricity to the company's Bathinda and Ludhiana units for 25 years. The projected commencement of power supply is within 15 months, and the company anticipates a 10-12 per cent reduction in power costs as a result of this initiative.
Earlier, the shares of the company ex-traded stock split of equity shares in the ratio 10:1 i.e., sub-division/stock split of 1 equity share having a face value of Rs 10 each into 10 equity shares having a face value of Re 1 each. The ex-date for the stock split was September 13, 2024.
The shares of the company have a PE of 14x and have a good return on equity (ROE) track record: 3 Years ROE 30 per cent. The stock is up by 41.5 per cent from its 52-week low of Rs 72 per share and gave multibagger returns of over 1,000 per cent in 5 years. Investors should keep an eye on this small-cap stock.
Disclaimer: The article is for informational purposes only and not investment advice.