Steel Strips Wheels freezes at 5% upper circuit on stock split plan

Shares of Steel Strips Wheels (SSWL) were locked in the 5 per cent upper circuit at Rs 1,665.15 on the BSE on Tuesday after the company announced that its board will meet on September 3, 2021 to consider stock split.

The stock of auto parts & equipment company had hit a record high of Rs 1,741.80 on August 8, 2021. Till 02:50 pm, a combined around 62,000 equity shares had changed hands and there were pending buy orders for 17,000 shares on the NSE and BSE, the data shows. In comparison, the S&P BSE Sensex was up 0.09 per cent at 55,632 points.

“A meeting of the Board of Directors of the Company is scheduled to be held on September 03, 2021 to consider sub-division/split of the equity shares of face value of Rs 10 each of the Company in such manner as may be determined by the board,” SSWL said in exchange filing.

SSWL will sub-divide the face value of equity shares to a lower denomination to make the stock more affordable for the small retail investors and increase liquidity.

A stock split is a corporate action in which a company increases the number of its outstanding shares by issuing more shares to current shareholders. The primary motive of a stock split is to make shares seem more affordable to small investors. Although the number of outstanding shares increases and the price per share decreases, the market capitalization (and the value of the company) does not change.

In the past three months, the stock of SSWL has outperformed the market by surging 128 per cent as compared to a 12 per cent rise in the S&P BSE Sensex.

Earlier this month, SSWL had announced it has achieved highest-ever net turnover of Rs 306.12 crore in July 2021. Last month, the company had said it had received new orders for over $15 million (Rs 113 crore) from Western Hemisphere.

The auto parts and equipment manufacturing company recorded 177 per cent year-on-year (YoY) growth over July 2020. The company achieved gross turnover of Rs 372.22 crore in July 2021 as against Rs 132.75 crore in July 2020, thereby recording a growth of 180.39 per cent YoY, SSWL said in a release.

The export segment volume rose by 164 per cent YoY and crossed 1,000 million-mark for the first time ever in July 2021. The company expects the growth to continue going ahead in July-September quarter of the financial year 2021-22 (Q2FY22).

"The passenger vehicle (PV) volumes saw a growth with continued demand. Going into festival season, we hope that the upward growth for PV segment to continue in Q2. As regards to the tractor segment, the segment continued to report a positive growth in the month, as SSWL registered its highest-ever sales in the segment in July 2021 and hopes that this will continue with upward trend for Q2. The commercial vehicle (CV) segment reported 188 per cent YoY growth during the month and the segment is expected to witness momentum going ahead in coming months," it said.