This Multibagger Stock is Set to Declare Bonus Shares Soon. More Details Inside...

'The icing on the cake.'

This is a popular idiom which means an attractive addition or enhancement. For example, we know that a cake is tasty but the icing on top of it is an extra spoonful of deliciousness.

In the stock markets, we can use this idiom for multibagger stocks that also give out bonus shares to their shareholders.

In this article, let's check out one such company that has delivered multibagger returns of more than 200% in the last one year and is now rewarding shareholders with bonus shares.

The company is question is Evans Electric.

Here's all you need to know about the company's bonus issue...

• Evans Electric announced bonus shares on 16 December 2022.
• The company will issue bonus shares in the ratio of 1:1. This means one bonus share for every one existing share held in the company.
• The record date for the same is 10 February 2023.

The company's board will issue up to 1,372,000 fully paid-up equity shares worth Rs 10 apiece as bonus equity shares.

The issue of bonus shares will increase the liquidity of the stock. This will decrease the share price and make it more affordable for retail investors.

A look at the company's financials

In financial year 2021-22, the company's revenue fell by 22% while profits increased despite falling revenues.

Net profit stood at Rs 8 million (m), which is 33% higher compared to last financial year's net profit.

On a compounded average growth rate (CAGR) basis, in the past five years, the company's sales and profits have grown 7% and 12%, respectively.

Financial Snapshot (2018-2022)

Year	Mar-18	Mar-19	Mar-20	Mar-21	Mar-22
Total revenues (Rs in m)	59	70	76	98	76
Growth (%)		19	9	29	-22
Profit after tax (Rs in m)	5	12	10	6	8
Growth (%)		140	17	40	33
Net profit margin (%)	8.4	18.2	14.2	6.1	11.2

Source: Equitymaster

The company generates a majority of revenue from repair contracts.

What should you do when a company issues bonus shares?

When financially strong companies announce bonus shares, it usually boosts investors' faith in the company. Mainly because it signals the company is committed to its shareholders.

Issuing bonus shares can increase the liquidity of a stock, increasing retail participation. This in turn, could give a boost to the share price. However, there is little evidence for the same.

Moreover, much like dividend payments, bonus issues are discretionary. They are highly dependent on a company's earnings and management policy. And both these factors can change.

How shares of Evans Electric have performed recently

Evans Electric share price is down 12% in 2023 so far.

However, the shares are up 218% over the past one year.

The stock touched its 52-week high of Rs 411.7 on 16 December 2022. Its 52-week low was Rs 70 touched on 11 August 2022.

About Evans Electric

Evans Electric is engaged in the business of repairing re-winding and re-designing including in-house manufacturing of replacement components of small medium and large electric motors generators and transformers which are used in thermal, hydro, diesel, gas, and nuclear electric power generation etc.

It also provides on-site services for large electric motors generators and transformers that are too large and cannot be transported to the factory.

For more details about the company, you can have a look at Evans Electric factsheet.

You can also compare Evans Electric with its peers:

Evans Electric vs Vivanta Industries

Evans Electric vs Swagtam Trading

Evans Electric vs Nirmitee Robotics

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...