Alkyl Amines rallies 11% in two days on fixing record date for stock split

Shares of Alkyl Amines Chemicals jumped 8 per cent to Rs 6,386 on the BSE in intra-day trade on Friday, up 11 per cent in the two trading days, after the company fixed May 12 as the record date for the subdivision of face value of equity shares from Rs 5 to Rs 2. The stock will turn ex-date for the stock split on May 11.

The stock of the specialty chemicals maker surpassed its previous high of Rs 6,299 touched on April 8. At 10:08 am, it was trading 6 per cent higher at Rs 6,314 as compared to a 0.31 per cent decline in the S&P BSE Sensex.

Upon the sub-division of the face value of each share from Rs 5 to Rs 2, all fractions resulting from the sub-division of shares shall be consolidated into whole equity shares and the same will be disposed of at the market price and the net proceeds (less expenses, if any) will be distributed proportionately, as far as practicable, to the members concerned, the company said.

Generally, a company plans to go for a stock split to make the shares more affordable for small retail investors and increase liquidity.

The rationale behind the split is to facilitate more liquidity of the company's equity shares in the stock market, the company said.

In the past six months, the stock of Alkyl Amines has rallied 109 per cent as compared to a 17.5 per cent rise in the benchmark S&P BSE Sensex. In three years, the stock has zoomed 851 per cent as against a 39 per cent rise in the benchmark index. Earlier, in September 2014, the company had subdivided the face value of its equity shares from Rs 10 paid-up to Rs 5 paid-up.

Alkyl Amines has had a reasonably good FY21. It has clocked a 20- 25 per cent growth in the topline in the past three quarters. Margins have increased mainly due to benign raw material prices, which have hardened now. The company is optimistic about growth next year. The momentum in pharma continues to remain strong as more and more pharma companies are investing in Capex. The Production-Linked Scheme is faring well for the company too.

The company doesn’t focus on margins, but mainly on volume growth. Volume growth of 10 per cent YoY is chased by the company. It believes that gaining market share is the most important factor for its success. It also attaches grave importance to cost control measures. The company guided that Ebitda (earnings before tax, interest, depreciation and amortisation) margins will never fall to 25 per cent, going forward.  

The margins may fall by 400-500 bps from the current level due to a change in the product mix in the future, analysts at HDFC Securities said in a recent report.