K&R Rail Engineering Announces 1:10 Stock Split After 1,732% Gains in 3 Years [2024]

A promising railway company  (K&R Rail), known for its impressive financial performance and currently holding penny stock status, is set to undergo its first-ever stock split. This move is expected to make the stock more affordable and accessible to both existing and new investors. The stock split will occur at a 1:10 ratio, meaning each existing share will be divided into ten smaller shares.

This railway company is not among the well-known giants like IRFC, IRCTC, or RVNL. Instead, it is K&R Rail Engineering, a civil construction company specializing in railway infrastructure. K&R Rail has seen significant buying interest in the market leading up to this stock split announcement. The company boasts a healthy return on equity of 10.78% and has delivered an extraordinary 1,732% return over the past three years. As of August 3, 2024, K&R Rail’s share price stands at ₹466.30, up from ₹25.45 on August 3, 2021, with a market capitalization of ₹987.20 crore.

Stock Performance and Financial Overview

According to recent data, K&R Rail has demonstrated notable financial growth:

• Annual Revenue Growth: The company’s annual revenue surged by 70.65% in the last fiscal year, reaching ₹665.91 crore, significantly outperforming its sector’s average revenue growth of 11.49%.
• Net Profit Increase: The company’s annual net profit increased by 23.93% to ₹7.78 crore, although this is lower than the sector’s average net profit growth of 142.17%.

However, K&R Rail has faced some challenges:

• Stock Price Decline: Over the past year, the stock price fell by 18.74%, underperforming its sector by a significant margin of 94.17%.
• Quarterly Performance: The company’s quarterly revenue declined by 25.82% YoY to ₹152.75 crore, while the sector’s average YoY revenue growth for the quarter was 8.84%. Additionally, the company reported a quarterly net profit decline of 341.15% YoY to ₹7.78 crore, underperforming the sector’s average YoY net profit growth of 2.95%.

Despite these setbacks, K&R Rail remains a financially sound company:

• Debt-Free: The company has a zero debt-to-equity ratio, indicating strong financial stability.
• Valuation Metrics: The Price to Earnings (P/E) ratio of K&R Rail is 128.54, which is higher than the sector average of 43.31. The Return on Equity (ROE) for the last financial year was 12.95%, which is within the healthy range of 10% to 20%.
• Promoter and Mutual Fund Holdings: The promoter shareholding remained steady at 55.82%, with no changes in mutual fund holdings, which remained at 0%. Notably, the company has no promoter pledges.
• Interest Coverage Ratio: The interest coverage ratio stands at 9.51, well above the threshold of 1.5, indicating the company comfortably meets its interest obligations.

K&R Rail Engineering Stock Split Details

K&R Rail Engineering has announced its first-ever stock split in the ratio of 1:10. This means each existing equity share with a face value of ₹10 will be subdivided into ten smaller shares with a face value of ₹1 each. The company will announce the record date for the stock split after shareholder approval at the upcoming Extraordinary General Meeting (EGM).

The primary objective of the stock split is to enhance liquidity and make the shares more affordable, thereby encouraging the participation of smaller investors. K&R Rail expects to complete the stock split within approximately three months following shareholder approval.

About K&R Rail Engineering

Founded in 1998, K&R Rail Engineering was established to address the growing demand for mass transportation and bulk logistics of goods and materials through the Indian Railway network. The company has since become a key player in the railway infrastructure sector.

Conclusion

As K&R Rail Engineering prepares for its first-ever stock split, investors are keenly watching the company’s next moves. With a strong financial foundation and an impressive track record of returns, this stock split could further solidify K&R Rail’s position in the market while offering greater opportunities for investors. Keep an eye on this company as it continues to make waves in the railway infrastructure space.

Frequently Asked Questions (FAQs)

1. What is a stock split?
A stock split is a corporate action where a company divides its existing shares into multiple new shares to increase the number of shares available. This does not change the overall value of the company but makes the stock more affordable for investors by reducing the price per share.

2. What does a 1:10 stock split mean?
A 1:10 stock split means that each existing share of the company is split into 10 smaller shares. For example, if you own 1 share priced at ₹1000, after a 1:10 split, you will own 10 shares priced at ₹100 each.

3. Is a 1 to 10 reverse stock split good or bad?
A reverse stock split, such as a 1 to 10 split, is often seen as a way to boost the company’s share price by reducing the number of shares outstanding. It can be a sign of the company trying to avoid delisting or improve its market perception. Whether it’s good or bad depends on the reasons behind it and the company’s future performance.

4. Is OK Play India announcing a 1:10 stock split?
As of now, there is no official announcement from OK Play India regarding a 1:10 stock split. Investors should keep an eye on official communications from the company for any updates.

5. What is a 1:5 stock split?
A 1:5 stock split means that for every 1 share you currently own, you will receive 5 shares after the split. The price per share will be adjusted accordingly so that the total value of your investment remains the same.

6. Is a stock split good or bad?
A stock split is generally seen as a positive move because it increases the liquidity of the shares, making them more affordable and accessible to a broader range of investors. However, it does not change the fundamental value of the company.

7. Do stocks go up after a split?
Stocks sometimes go up after a split due to increased interest and accessibility, but it is not guaranteed. The actual movement of the stock price will depend on various factors, including the overall market conditions and the company’s performance.

8. Do I lose money on a reverse stock split?
You don’t lose money on a reverse stock split, as the value of your total investment remains the same. However, the price per share increases, and the number of shares you own decreases proportionally.

9. Do companies succeed after a reverse split?
The success of a company after a reverse split depends on the underlying reasons for the split and the company’s overall health. A reverse split alone doesn’t determine success; it’s the company’s performance post-split that matters.

10. What are the disadvantages of a reverse stock split?
Disadvantages of a reverse stock split include the perception that the company is in financial trouble, potential decrease in liquidity, and possible negative investor sentiment, which might lead to a decline in the stock price.

11. Why is MRF not splitting stocks?
MRF has not announced any plans to split its stocks. Companies may choose not to split their stocks for various reasons, including maintaining exclusivity or managing the share price within a specific range to attract long-term investors.

12. Should I buy shares before a split?
Buying shares before a split can be advantageous if the stock is expected to perform well after the split, as you may benefit from the increased number of shares. However, it’s important to conduct thorough research before making any investment decisions.

13. Which stock is a multibagger in 2024?
Predicting which stock will be a multibagger involves analyzing various factors, including the company’s financial health, growth potential, market trends, and industry performance. Investors should conduct their research or consult with financial advisors.

14. Is it better to buy stock before or after a split?
There is no definitive answer to whether it’s better to buy stock before or after a split. Buying before may offer the benefit of owning more shares post-split, while buying after could allow you to purchase shares at a more affordable price. It depends on your investment strategy and the company’s prospects.

15. What does face value 10 to 1 mean?
A face value change from 10 to 1 means the nominal or par value of the stock is reduced from ₹10 per share to ₹1 per share, often coinciding with a stock split to increase the number of shares in circulation.

16. What is a stock split 20 to 1?
A 20 to 1 stock split means that each existing share is split into 20 new shares. For example, if you own 1 share priced at ₹2000, after the split, you will own 20 shares priced at ₹100 each.

17. Is consolidating shares good or bad?
Consolidating shares, typically through a reverse stock split, can be good or bad depending on the context. It can improve the stock’s price and reduce volatility, but it may also signal financial trouble, which could negatively affect investor confidence.