Vijay Kedia Backed Engineering Stock to Undergo 1:2 Stock Split

In 2024, many stocks have skyrocketed, defying gravity and sending portfolio values soaring.

Every investor wants a piece of the skyrocketing Indian stock market, but eye-watering share prices can be a barrier to entry.

Due to this, stock splits have become regular events, often sparking interest and curiosity from investors and traders alike.

Essentially, stock splits change the number of shares outstanding, which adjusts the price per share while maintaining the same total value. This can significantly impact a company's stock price, liquidity, and investor sentiment.

Joining this trend is ace investor Vijay Kedia's portfolio stock, Elecon Engineering.

• The board of Elecon Engineering Ltd, at its meeting on 25 June, approved a stock split in the ratio of 1:2. This means that one share with a face value of Rs 2 would be split into two shares having a face value of Re 1 each.
• The face value will be cut from Rs 2 to Re 1 per share.
• The company has fixed 19 July as the record date for the same.
• According to the company, the rationale for subdivision is to improve the liquidity of its equity shares in the stock market and to make it more affordable to small retail investors.

Interestingly, this is not the first time the company has come out with a stock split.

Earlier in 2006, the company had carried out 1:5 split. This means one share with a face value of Rs 10 was split into five shares having a face value of Rs 2 each.

A Close Look at its Financials

The company has demonstrated revenue growth of 26.4% on a compounded annual growth rate (CAGR) basis over the period spanning from FY22-24. This can be credited to continuous growing demand.

The net profit also saw a significant increase, rising from Rs 1,405 million (m) in March 2022 to Rs 3,556 m in March 2024, a CAGR of 59.1%.

The net profit margin also displays a rising trend. It was 11.6% in 2022 but it increased to 18.4% in 2024.

Elecon Engineering Financial Snapshot (2022-24)

Particulars	31-Mar-22	31-Mar-23	31-Mar-24
Total Revenues (Rs m)	12,119.00	15,297.00	19,374.20
Revenue Growth (%)	-	26.2	26.7
Net Profit (Rs m)	1,405.00	2,375.00	3,556.00
Net Profit Margin (%)	11.6	15.5	18.4

Data Source: BSE

In Q4 FY24, its revenue from operations grew 33% to Rs 5,646.2 m in the quarter that ended in March 2024.

Its net profit climbed 52.6% to Rs 1,036.5 m, compared to the corresponding period a year ago. This growth is largely attributable to increased order inflows across industries, increase in wallet share among existing customers & new customer addition.

How Shares of Elecon Engineering have Performed Recently

The share price of Elecon Engineering has dragged by 3% in the past one month.

Over the past one year, shares of the company have rallied 76%. In 2024, the share price of the company climbed 37%.

The company touched its 52-week high of Rs 1,409 on 8 July 2024 and its 52-week low of Rs 627 on 10 July 2023.

What Next?

Entering FY25 and beyond, the company aims to expand its presence in international markets while strengthening relationships with current OEM partners and forging new alliances.

Recognizsng India's vast potential and the upswing in the capex cycle, the company is committed to retaining its leadership position. While maintaining its dominance in the domestic market, it's actively exploring new export opportunities.

The company sees significant potential in markets like Europe, Russia, and other regions where the demand for its gear solutions is increasing.

Committed to continuous innovation and the development of new products, Elecon Engineering is venturing into high-speed gears used in gas turbines, steam turbines, and compressors.

Leveraging its expertise, the company is upgrading its technology through consultants to stay at the forefront of the industry.

About the company

Elecon Engineering is one of the largest manufacturers of material handling equipment and industrial gears in Asia. The company has a global presence with clients in the US, UK, and European countries.

Elecon Engineering primarily operates in two business segments: Transmission Equipment and Material Handling Equipment.

The company caters to the needs of various sectors like steel, fertilizers, cement, coal, lignite, and iron ore mines, sugar, power stations, and port mechanisation.

To know more about the company, you can check out Elecon Engineering Company's company fact sheet and its quarterly results.

You can also compare Elecon Engineering with its peers.

Elecon Engineering Company vs Action Construction Equipment

Elecon Engineering Company vs Brady & Morris Engineering Company

Elecon Engineering Company vs Eimco Elecon

And to know more about the sector, you can have a look at the engineering sector report on our website.

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...