Authorized capital and Paid-up capital are different. Authorized capital can be anything (as decided by the board of course). Paid-up capital is the number of shares paid for and are in circulation (either with the promoters or with the public).
Paid up capital can never be greater than authorized capital.
Currently, the authorized capital is Rs. 8 cr. They are increasing the authorized capital to Rs. 15 cr.
They currently have a paid-up capital of Rs. 7.31 cr. (73.14 lakh shares, Rs. 10 face value)
Since they are issuing bonus shares in the ratio of 2:1 (for every 2 shares, you get 1 bonus share), the total number of new shares would be 36.5 lakhs and at Rs.10/- face value, the value of new shares would be 3.65 cr. Therefore, the new paid up capital of the company will be Rs. 7.31 cr + Rs. 3.65 cr = Rs. 10.97 cr.
Since paid up capital cannot be more than authorized capital, they have first increased the authorized capital to Rs. 15cr and then are getting this bonus issue in.
There is no follow-on IPO in case of bonus issue. The shares directly get credited into your demat account.
Price after the bonus record date: Let’s say the price before the record date is Rs. 180/-. Since the ratio of bonus is 2:1, the resulting price ex-bonus would be Rs. 120/-. Of course, there might be many folks who have just bought it for the bonus. Therefore after the bonus date, there might be a sell off and the price might (might!) drift down lower from Rs. 120/-.
Thanks Kiran for explaining in detail. It seems to me that it is just accounting side how we reflect things. 3.65 cr would go to paid up capital from retain earning and underlying business value does not change. Please correct me if i am assuming anything wrong.
this article mentions around 22% growth in the first quarter in domestic market plus better than peer growth in exports .(although it seems negligible as compared to domestic figures)
valuationwise and growth prospects wise looks a strong buy.
What is really impressive is that the co has seen a spectacular improvement in all ratios for last 4-5 years. We must try to understand from the Management whether the trend is sustainable.
My major concern is how will they tackle the big guys like Bajaj Auto when they expand into markets other than Gujarat? Can they graduate to become a large player producing lacs of vehicles rather than a niche player producing a few thousand without getting into a price and turf war with the bigger players?
Here the investment theme is about undervaluation in a growing company. And company seems to be well placed in the only segment of automobile which is growing at good speed and that is the three wheeler passenger and transport segment.
They seem to have done quite well in their recent forays into other states. it needs to be seen how they sustain their momentum.
Looking at the results for the last eight quarters, it seems there is definite seasonality to the company’s business. June is weakest quarter among all four quarter. Sales (revenues) keep on increasing every quarter subsequently and max sales is recorded in march quarter.
So I guess comparing june qtr results with preceding march quarter might be misleading.
What I look is overall picture over a whole year. If I expect a 20% growth for fy 13, then I get an EPS of around 21-22 per share. At 6 times projected PE do you think atul auto is a sell?
Or for that matter, take trailing earnings. Market cap is around 127 crores and fy 12 net profit is 15.6 crores. At these valuations of around 8 PE, I dont think stock is all that expensive.
I think the current correction is the usual post bonus correction seen in most stocks.
Real trigger should be the actual declaration of results whenever that happens.
correction in above figures. a 20% growth would lead to projected eps of around 19-20 per share. Pe range then would be around 6-7 on projected fy 13 earnings.
Got to speak to a few Atul owners in Kerala. They are owners+drivers so their opinion should have some weight.
They feel the product has excellent build quality. Though mileage is roughly same maintenence is lower. But they are not happy with the service centre network.
I am trying to get info about expansion of dealer/service centre network directly from the current dealer (the dealership is with a strong group which has proven track record in Maruti dealership)
Was going thru the Bajaj auto results. The 3 wheeler segment has negative growth due to fall in exports. But the com claims 29% growth in Diesel segment in Indiabeating the industry average thereby increasing its market share by 400 bp. Now thats ominous signs for Atul and Piaggio. I think Bajaj’s drawback was lack of diesel variant which they have plugged now. Piaggio and Atul were growing in the Diesel segment I guess. Has Bajaj wokenup now and how will it affect Atul?
I do agree with you, although the market may not be as forgiving. The stock can drift sideways or downwards depending on Q1 results that should be lacklustre. But Q2/Q3 should hopefully be better.
Although top line growth is good, translating it into profits is another matter. I think there might be some margin pressure. I think things will be clearer post-Q1 results.
Yeah, there is always a seasonality in auto business and usually H2 is better and Q1 is the weakest for all the cos.
For FY13, they are targeting to maintain the momentum of 30%+ growth but the same may be in the range of 25-30% as there is an actual slowdown in this industry. All the other cos have been reporting negative growth for last 2-3 qtrs while Atul has been growing.
I’m happy with the 20% growth YOY for Q1…do hope it to better if the rural demand starts picking up.
Would agree with Hitesh, the co is having a fantastic balance sheet and if they are able to deliver, the stock can get re-rated. Where do we get cos which have a product we can see, brand value, growth of 25-30%, debt free balance sheet etc etc at 6-7 times earnings?
I remember being skeptical about Atul Auto’s prospect during our interaction. But a small little scuttlebut later, closer look at company’s AR, balance sheet and competitve position, I can not agree with you more. Post our conversation, I have been observing almost every three wheeler LCV and I am startled to see 7-8 out of 10 low tonnage LCV as Atul Shakti while Bajaj is a far distant second and piaggio is non existant compared to these two. It is indeed a good opportunity to grab a great business at very very modest valuation.
Thanks for sharing your insight. Yes, they have a major market share of about 50-55% in Gujarat and about 30% market share in Rajasthan. Both these markets are front loaded engine market. Since 2008, the co has been able to develop rear engine autos which ply on rest of India. Since then the co has been trying to enter new states and capture market.
Hi Vinod, Sorry don’t track Tata Motors hence can’t help here.
tata motors is perceived to be moreof a cyclical being present in the CV space with main focus being on four wheelers and cars.
the three wheelers wherein atul auto operates is relatively less cyclical. It might get affected by slowdown but to a somewhat lesser extent than tata motors.
But still it is an interesting observation from you about the valuations of tata motors. do the dvr come into picture in valuations of tata motors?
