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Mirza International Ltd (NS:) is a leading footwear manufacturer, marketer, and supplier in India. Some of its well-recognized brands include Red Tape, Oaktrak, MODE & Bond Street. It is a small-cap company with a market capitalization of ₹ 3,601 crores. It has a return on equity of 16.15% and an ideal debt-to-equity ratio of 0.10. Moreover, it has a good dividend yield of 2.26%.
The company in an exchange filing dated February 21, 2023, said that the Allahabad Bench of National Company Law Tribunal in Prayagraj, Uttar Pradesh, had approved the composite scheme of arrangement between RTS Fashions Pvt Ltd, Mirza International Ltd, and Redtape Ltd. The ex-date and record date for the same is 29 March 2023.
According to the scheme of the arrangement, shareholders of Mirza International will receive fully paid-up equity shares of ₹ 2 each of REDTAPE, i.e., in the ratio of 1:1.
Conclusion :
The merger of promoter group-owned entity RTS Fashions Pvt. Ltd. into the company and the demerger of branded business into Redtape Ltd will unlock more valuation for the shareholders in long run. The company has already given multi-bagger returns of more than 500% in the last couple of years as its share price increased from ₹ 46 to ₹ 280 levels (52 weekly high was in this year).
In the long run, we can witness a vested long build-up from an investment point of view given the track record of the company, however, the reduction in total share price will lead to more participation from retail investors and cause a spike in total turnover volume which in turn could drag the prices down below ₹ 30 as well in the short run.
Disclaimer: The above article is for self-educational purposes. The research was conducted by the following students: G10 and RK for learning purposes.
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