The Avanti Feeds stock rose up to 19.99% in trade today after the firm implemented stock split and bonus issue today. The stock rose to its highest level of 625.25 intra day on the BSE. It closed 16.69% or 86 points higher at 608.00 on the BSE.
The manufacturer of prawn, fish feeds, shrimp processor and exporter had decided to split each equity share from face value of Rs 2 to Re 1 each.
The firm also conducted issue of bonus equity shares of Re 1 each in the special ratio of 1:2, that is one equity share of Re 1 each for every two equity shares of Re 1 each (after sub-division of equity shares).
The stock has been gaining for the last two days and has risen 17.37% during the period.
It has gained over 28 percent during the last one year but fallen by the same quantum since the beginning of this year.
Bonus issue of shares refers to additional shares given to the current shareholders without any additional costs depending upon the number of shares that a shareholder owns.
This leads to an increase in number of shares held by shareholders. A rise in number of shares leads to fall in the share price but the overall capital remains the same after the issue. The fall in share price makes the stock more affordable for retail investors.
A stock split involves issuing of more shares to the current shareholders. After the stock split comes into effect, the share price of the firm often rises since more retail investors are vying for the limited amount of shares after the stock has become cheaper than earlier.
Avanti Feeds in early June announced a 3.1% year-on-year fall in Q4 net profit. The firm reported Rs 86 crore for the quarter ended March 31, 2018 compared with Rs 88.7 crore net profit in the fourth quarter of the previous fiscal.
On a quarter-on-quarter basis, the firm reported 18% fall in net profit compared to Rs 105.06 crore in Q3 of last fiscal.
Its operating profit margin at 14.08% in Q4 is the lowest in the last five quarters.