Synopsis:- Sera Investments and Finance, an NBFC with a market cap of just Rs 275 crores, has announced a 1:5 stock split for eligible shareholders. An Extraordinary General Meeting (EGM) will be held on April 10, 2023, at the company’s registered office in Makarba, Ahmedabad. The issues to be discussed are the stock split and the alteration of the capital clause of its MoA.

Kapashi Commercials Ltd was established in 1985. On April 30, 2022, the company changed its name to Sera Investments & Finance India Ltd. This company is classified as a small-cap with a market capitalization of about Rs 275 crore. It operates as a Non-Banking Financial Company (NBFC) in the financial services sector, primarily focusing on investment activities such as trading in the stock market, providing loans, and leasing. 

At an upcoming EGM, the company will discuss approving a stock split and altering the capital clause of its MoA. The Board plans to split each existing equity share with a face value of Rs 10 per share into 5 shares with a face value of Rs 2 per share. The record date for the stock split will be announced later. The Board obtained consent from its shareholders for the stock split at an extraordinary general meeting held on March 1, 2023.

The Board also acknowledged the resignation of Viraj Samirbhai Shah from her position as Chief Financial Officer and has already filed the necessary disclosures. 

What is Stock Split?

A stock split is a process in which a company increases the number of its shares while maintaining the same total value of all outstanding shares. This is achieved by dividing each existing share into multiple shares. The purpose of a stock split is to increase the stock’s liquidity and make it more affordable for small investors to purchase. It is a strategy used by companies to make their shares more affordable and accessible to investors without fundamentally changing the value of the company.

Splitting a stock typically makes it more attractive to investors by increasing the number of shares available in the market, which can lead to increased trading volume and liquidity. This can also potentially increase the demand for the stock and its price. Importantly, a stock split does not dilute the ownership interests of existing shareholders.

Financials of the Company

Sera Investments & Finance India reported a net loss of Rs 1.23 crore in Q3FY23 compared to a net income of Rs 3.25 crore during the same period last year. The company’s EBIT fell to Rs 1.2 crore in Q3FY23 compared to Rs 2.68 in the year-ago quarter. 

Over the past five years, the company has produced a multi-bagger return of approximately 640%. The stock gained 388% YTD and also during the past three years. The stock is trading 24% below its 52-week-high of Rs 368.85 and 478% above its 52-week-low of Rs 48.55. The company’s current promoter shareholding is 70%, and the public stake is 30%. As of 12:35 pm on March 20, the share price has risen by 2.57% compared to Friday’s closing price of Rs 274.15 per share, which was at a lower circuit level of 3.25% on the BSE.