Sapphire Foods India Announces 5-for-1 Stock Split

In an exchange filing, dated 19.06.2024, Sapphire Foods informed the stock exchanges about the decisions made at the Board of Directors meeting on 19th June. The Board approved the alteration in the share capital of the company by the split of existing equity shares of the company from 1 equity share having a face value of Rs. 10/- each fully paid up, into 5 equity shares having a face value of Rs.2/- each fully paid up. The company also informed that the split is subject to the approval of shareholders at the forthcoming 15th Annual General Meeting of the company. In the course of the stock split, the company also announced the alteration of the Capital Clause (Clause V) of the Memorandum of Association of the Company (MoA) on account of the sub-division of equity shares. The stock split is expected to be completed within 3 months from the date of approval, subject to completion of necessary formalities.

The rationale behind the stock split

The company, as per the exchange filing, is yet to disclose its rationale behind the move. However, speculations have arisen that the split is a step towards improvement of liquidity of equity shares of the company in the capital markets. 

About the company

Since 2015, the company has established itself as one of the largest players in the booming Quick Service Restaurant Sector through its 800+ KFC, Pizza Hut, and Taco Bell restaurants across India, Sri Lanka, and the Maldives.

Financial and Stock Performance

In May 2024, Sapphire Foods posted a profit jump of 411.2% to Rs. 135.48 Crore in Q4FY23, as compared to Rs.26.50 Crore in Q4FY22. The Indian division of the company reported a revenue growth of 23%. The shares of the company ended 2.87% higher at Rs. 1557.50 on Wednesday against the previous close of Rs. 1514 on BSE. The market cap of the firm rose to Rs. 9,926,46 Crore. Sapphire Foods shares have a beta of 0.2, indicating very low volatility in a year.

Conclusion

With the promise of positive financial performance, Sapphire Foods’ plan to split its stock value may help in increasing the liquidity of its equity shares and its overall profits, in general.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.