Upcoming Bonus Shares 2023: Multibagger Stock Announces First Ever Bonus Issue

There aren't many Indian listed companies engaged in the business of forex and remittances activities.

There are just three players in fact - Paul Merchants, Delphi World Money, and Transcorp International.

Among these three, the share price of Paul Merchants has seen a decent spike in the week gone by.

In fact, the company has provided multibagger returns to shareholders rallying over 172% in 2023 so far.

The company is engaged into forex, tour and travels, and remittance activities for business travel, overseas education, among others. Recently, it has decided to issue bonus shares.

This would be the first ever bonus issue declared by Paul Merchants.

Here are its key details:

• Paul Merchants announced the bonus on 8 November 2023.
• It will issue bonus shares in the ratio 2:1. So, for every one share you own of Paul Merchants, you will be rewarded with two bonus shares.
• The record date for the same is Monday, 18 December 2023.

As of 8 December 2023, the share price of the company is trading at Rs 3,538. But, post issue of bonus shares, the stock price adjust to the extent of the bonus split.

Let's understand this better.

The reason behind a company issuing bonus shares is fairly simple.

First, the company might want to boost liquidity of its shares in the market.

Second, because the share price is too high and the stock might be unaffordable for many.

So, by issuing bonus shares, the total number of outstanding shares would increase and the share price would adjust accordingly.

A Close Look at the Financials

In its latest September 2023 quarterly results, the company's net sales increased by 4.4% to reach Rs 18.4 billion (bn) compared to the same period last year.

The net profit also increased by 21% to Rs 145 million (m) during the same time frame.

The earnings before interest, tax, depreciation, and amortisation (EBITDA) increased by 50% to Rs 312 m compared to the same period last year.

In its March 2023 annual report, the management of the company had stated that due to removal of restrictions on the international travel trade, the sale and purchase of foreign exchange had increased.

This might be the reason why the company is reporting strong quarters.

The overall turnover of the company is on a consistent rise. In the financial year 2022-23, the company recorded an overall turnover of Rs 68.7 bn which was Rs 52.6 bn in the previous financial year.

Similarly, the company's profit is also on the upward trajectory since the financial year 2020-21.

The Telegraphic Transfer business has been a major contributor of about 88.4% towards the overall forex sales. The remaining 11.6% is contributed by the currency business.

Post Covid, the company's revenue from the travel segment is on a consistent rise. In March 2023, the turnover from hotel bookings rose by a whopping 562% and revenue from the segment increased by 126% year on year (YoY).

Apart from all of these, the company is also involved in offering additional services related to Visa and other travel needs.

As travel booking picked up pace, so did Visa related activities which saw a 244% increase in revenue in the recent annual report as compared to the same period last year.

What's Next?

The management of the company is optimistic about the company's future as the global foreign exchange market is expected to grow at a CAGR of 7.5% during 2021- 26.

Moreover, the management has a focus on growth and is willing to strategise plans and policies to tap onto potential opportunities in emerging markets and worldwide.

However, they also mention about the risks which may slow down the business.

A rise in inflation and an economic downturn could pose a threat to the forex and international money transfer vertical of the business.

How Paul Merchants Share Price has Performed Recently

Paul Merchants share price is up over 8% in a week and over 48% in the past month. In 2023 so far, the stock has rallied 172%.

The stock touched its 52-week high of Rs 3,538 on 8 December 2023 and its 52-week low was Rs 1,050 on 3 April 2023.

Promoters have increased their stake in the company by 2% on a year on year (YoY) basis.

As of the September quarter in 2023, promoters now account for 74.6% of the company's stake, a notable increase from the 72.7% stake they held during the same time last year.

About Paul Merchants

Established in 1991, Paul Merchants is primarily focused on the forex and remittances business. In addition to these core services, the company extends its offerings to include hotel bookings, travel packages, and air ticketing.

Furthermore, Paul Merchants provides a range of complementary services associated with tours and travel activities, such as visa assistance and other related products.

The company also holds a RBI license to act as authorised dealer which can issue forex pre-paid cards to residents travelling abroad. It is also a sub-agent of EBIX Money Express for offering inbound international money transfer services.

For more details, check out Paul Merchant's 5 year factsheet and its quarterly results.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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