1:8 Bonus Shares & 5:1 Stock Split: Debt-Free Penny Stock Under Rs 5 in Focus as Company Enters into MoU with Rs 250 Crore Subhshri Group
The stock is up by 98 per cent from its 52-week low of Rs 2.37 per share.
Sellwin Traders Ltd, a Kolkata-based company, has signed a Memorandum of Understanding (MoU) with the Rs 250 crore Subhshri Overseas Ltd, a Mumbai-based group, to form a strategic partnership. This collaboration aims to establish a Holding company (Sellwin Traders) and a Subsidiary company (Subhshri Overseas Ltd) structure through a share swap arrangement. This MoU is non-binding and does not create any legal obligations, except for maintaining the confidentiality and committing to good-faith negotiations.
The proposed arrangement involves Sellwin Traders acquiring an agreed percentage of shares in Subhshri Overseas Ltd in exchange for a corresponding percentage of its own shares. The valuation and share swap ratio will be determined by a mutually agreed-upon third-party valuation expert based on the business prospects of both companies. Subhshri Overseas Ltd, founded in 1971 by Mr Madan Sundesha, is part of the M S Group and is involved in exporting products like Readymade Garments, textiles, and Imitation Jewellery to various global markets. The group has an average turnover of Rs. 250 crores and has received accolades like the "Star Export House" recognition from the Government of India.
Both companies will ensure that all necessary legal and regulatory approvals for the share exchange are obtained. After the share exchange, Sellwin Traders will hold a certain ownership stake in Subhshri Overseas Ltd, establishing a parent-subsidiary relationship. The Holding company will have the right to appoint at least one director to the board of the Subsidiary Company, while the Subsidiary Company will have the right to appoint two directors to the board of the Holding Company. However, the Holding Company will not have operational control over the Subsidiary Company.
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For the nine months of FY25, Sellwin Traders reported a revenue of Rs 49.67 crore, a 103 per cent increase compared to the Rs 24.43 crore in the corresponding period last year. Net profit for the same period surged almost threefold to Rs 2.26 crore from Rs 57 lakh in the previous year. In Q3FY25, the company witnessed a 90 per cent growth in revenue to Rs. 17.41 crore and a remarkable 257 per cent increase in net profit to Rs 75.75 lakh.
The company recently underwent a 5-for-1 stock split, reducing the face value of each share from Rs 10 to Rs 2. Concurrently, the company declared a bonus issue of shares to existing shareholders in a 1:8 ratio, utilizing available free reserves and the security premium account. The ex-date for both the stock split and bonus issue was Friday, November 1, 2024.
The company has a market cap of over Rs 100 crore and as of December 2024, the company is debt-free. The stock is trading at 0.78 times its book value and debtor days have improved from 230 to 126 days. On Thursday, shares of the company jumped 4.45 per cent to Rs 4.69 per share from its previous closing of Rs 4.49 per share with a spurt in volume by more than 1.01 times on BSE. The stock is up by 98 per cent from its 52-week low of Rs 2.37 per share.
Disclaimer: The article is for informational purposes only and not investment advice.