Chandrima Mercantiles Approves 1:10 Stock Split: Micro-Cap Penny Stock in Focus After Board Nod
🔹 Introduction:
Chandrima Mercantiles Ltd., a micro-cap company engaged in the distribution of a wide range of consumer goods, has caught the attention of investors and traders alike after its board approved a 1:10 stock split. The company’s move is aimed at improving stock liquidity and making its shares more affordable for retail investors.
Despite this positive corporate action, the stock hit its 2% lower circuit on Tuesday, slipping to ₹49.52 from its previous close of ₹50.53. With a current market capitalization of around ₹110 crore, this Ahmedabad-based company is now in the spotlight.
🔹 What Is a Stock Split and Why It Matters:
A stock split increases the number of shares outstanding by issuing more shares to current shareholders. In Chandrima’s case, each existing share of face value ₹10 will be split into 10 shares of face value ₹1. This does not change the total value of the investment but makes individual shares more affordable, thus increasing liquidity and retail participation.
This move is particularly impactful for micro-cap or penny stocks, where liquidity can be a challenge. Chandrima Mercantiles’ stock split aims to reduce the per-share price and attract a broader investor base.
🔹 Company Profile: A Glimpse into Chandrima Mercantiles
Founded in 1982, Chandrima Mercantiles Ltd. has transitioned from trading in building materials, yarn, and jute to focusing on textiles, bullion, gold, silver, and jewelry products. Headquartered in Ahmedabad, Gujarat, the company has a diversified portfolio catering to multiple consumer segments.
🔹 Recent Developments and Board Approvals:
At the latest board meeting, the company approved:
- A 1:10 stock split (₹10 face value share to ₹1 face value).
- Audited financial results for FY25.
- Appointment of secretarial and internal auditors.
- Plans to call a general meeting for final shareholder approval.
The stock split process is expected to be completed within six months of shareholder approval.
🔹 Financial Snapshot: A Mixed Bag of Results
| Particulars | Q4FY25 | Q3FY25 | Q4FY24 |
|---|---|---|---|
| Revenue from Operations | ₹8.76 Crores | ₹6.09 Crores | ₹10.54 Crores |
| YoY Revenue Growth | -16.8% | — | — |
| QoQ Revenue Growth | +43.8% | — | — |
| Net Profit / (Loss) | ₹(0.99) Crores | ₹0.40 Crores | ₹2.36 Crores |
| YoY Profit Change | — | — | Declined |
| QoQ Profit Change | — | Declined | — |
🔹 Key Financial Ratios of Chandrima Mercantiles Ltd.
| Ratio | Value |
|---|---|
| Market Cap | ₹110 Cr |
| Current Price | ₹49.6 |
| 52 Week High / Low | ₹109 / ₹11.4 |
| Stock P/E | 151 |
| Industry P/E | 44.28 |
| Book Value | ₹45.8 |
| Dividend Yield | 0.00% |
| Return on Capital Employed (ROCE) | 0.89% |
| Return on Equity (ROE) | 0.98% |
| Debt to Equity Ratio | 0.03 (very low) |
| 3-Year Avg Net Profit Growth | 159.79% |
Despite a high P/E ratio of 151, which indicates overvaluation compared to the industry average, the company boasts a very low debt-to-equity ratio and strong historical profit growth, which might interest long-term investors looking beyond short-term volatility.
🔹 What This Means for Investors:
The stock split could potentially drive higher trading volumes and price action in the near term. While the company is facing pressure on its bottom line, its strategic shift toward affordability and investor inclusiveness may improve long-term sentiment.
However, the current financials are a mix of positive and concerning indicators—the profit has turned negative in Q4FY25, but revenue is recovering QoQ. Investors should weigh these metrics carefully and track upcoming quarterly results and shareholder meeting outcomes.
🔹 FAQs: Chandrima Mercantiles Stock Split News
Q1. What has Chandrima Mercantiles announced recently?
A1. The company has approved a 1:10 stock split, meaning every ₹10 share will be split into ten ₹1 shares.
Q2. Why is the stock split important?
A2. It improves liquidity and makes shares more affordable for retail investors, potentially increasing trading activity.
Q3. When will the stock split be implemented?
A3. The process is expected to be completed within six months after shareholder approval in the upcoming general meeting.
Q4. How has the company’s financial performance been recently?
A4. In Q4FY25, the company saw a revenue increase QoQ but reported a net loss, indicating pressure on profitability.
Q5. Is Chandrima Mercantiles financially stable?
A5. Yes, it has a very low debt-to-equity ratio (0.03), though its high P/E and recent losses require cautious analysis.
Q6. What sectors does the company operate in?
A6. It trades in textiles, bullion, jewelry, gold, and silver—diversified across various consumer sectors.
Q7. What is the current market cap and stock price?
A7. The market cap is approximately ₹110 crore and the stock is trading at ₹49.6.
🔹 Conclusion:
Chandrima Mercantiles Ltd.’s bold move to approve a 1:10 stock split brings it into investor focus, especially among penny stock enthusiasts. While the financials show some red flags in terms of profit margins, the company’s low leverage, diversified business model, and strategic capital move could set the stage for renewed interest in this micro-cap stock. Investors should monitor developments closely and assess the upcoming general meeting for further clarity.
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