Surya Roshni share price surges 10% ahead of record date for 1:1 bonus share issue

Bonus shares: Shares of Surya Roshni, a prominent smallcap stock, saw a remarkable 10 per cent surge in intra-day trade on Tuesday, December 31, amidst a generally weak market mood. This rally came ahead of the company’s much-anticipated 1:1 bonus issue.

Surya Roshni has fixed Wednesday, January 1, 2025, as the ‘Record Date’ to determine the eligibility of its shareholders for the issuance of bonus shares in a 1:1 ratio. To be eligible for the bonus shares, investors need to purchase shares of Surya Roshni today given the T+1 settlement cycle. 

The 1:1 bonus share issue means that for every share held, shareholders will receive one additional share, free of cost. The bonus shares will be issued to eligible shareholders by January 2, with these shares expected to be listed on the stock exchange on January 3.

This corporate action marks a significant milestone for Surya Roshni as this is the first bonus share issue by the company. The move is expected to enhance the liquidity and attractiveness of the stock, further benefiting its investors.

In an official exchange filing, the company confirmed receiving in-principle approvals from both BSE and the National Stock Exchange of India (NSE) for the proposed allotment of the bonus shares. 

What Does a 1:1 Bonus Share Issue Mean?

A 1:1 bonus issue refers to the allocation of one new equity share for every existing share held by the shareholder. Essentially, this means that the total number of shares in circulation doubles, but the overall ownership percentage of the shareholders remains unchanged. While the share price typically adjusts to reflect the new shares, the market capitalisation of the company remains unaffected.

This bonus issue is part of Surya Roshni’s broader efforts to reward its investors. Over the past year, the company has paid out three dividends, including an interim dividend of ₹2.50 per share in FY25. Earlier in 2024, the company also declared interim and final dividends of ₹2.50 each, totalling ₹7.50 per share.

Additionally, Surya Roshni underwent a stock split in October 2023, with the face value of its shares being reduced from ₹10 to ₹5 in a 1:2 split.

Stock Price Performance and Trends

Ahead of the record date of the bonus issue, Surya Roshni’s stock price surged by 10 per cent, reaching an intra-day high of ₹616.80. Despite this uptick, the stock is still approximately 27 per cent away from its 52-week high of ₹841.50, which was recorded in November 2024. On the other hand, the stock has risen by 32 per cent from its 52-week low of ₹467.15, recorded in March 2024.

In terms of performance in 2024, Surya Roshni has had a challenging year, with its stock price underperforming the broader market. The stock has fallen 28 per cent year-to-date, compared to an 8 per cent rally seen in Sensex during the same period. 

The stock’s performance in 2024 has been volatile, with six months of positive returns and six months of negative returns. However, it showed improvement in December, gaining over 5 per cent after two consecutive months of losses. Notably, the stock shed 15.5 per cent in November and 6 per cent in October.

Financial Performance: Q2 FY24 Results

Surya Roshni’s financial performance in Q2 FY24 has been less than promising. On a consolidated basis, the company reported a significant 55 per cent decline in net profit to ₹34 crore compared to ₹76 crore in Q2 FY23. Net sales also dropped by 20 per cent, totalling ₹1,529 crore for Q2 FY24, compared to ₹1,907 crore in the same period the previous year.

The company’s profit before tax (PBT) stood at ₹46 crore, a decline of 56 per cent year-on-year (YoY), while EBITDA fell by 40 per cent YoY to ₹83 crore. The disappointing results were primarily due to a sharp decline in HR steel prices in the steel pipes business, leading to lower revenues. Despite this, the company managed to mitigate some losses through improved operational efficiencies.

Meanwhile, the lighting and consumer durables segment faced continued price erosion in LED products. However, better cost management and a favourable product mix helped the company achieve relatively better performance in this segment.

About Surya Roshni

Surya Roshni is one of India’s leading manufacturers and exporters of electric resistance welded (ERW) pipes, and it is the largest producer of ERW galvanized iron (GI) pipes in the country. The company also has a significant presence in the lighting industry, offering a wide range of lighting products, including LED lights. In addition, Surya Roshni’s consumer durable business offers a variety of fans and home appliances.

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