In a significant move the Central Government has taken a decision on the partial off-load of its stake in Enginners India Limited (EIL) one of the Public Sector Undertakings which is in sparkling financial health. This was decision was taken by the Cabinet Committee of Economic Affairs (CCEA) along with other decisions. The off-load would take in the form of a follow-on public offer. This momentous decision has obviously been welcomed by stock markets as well as the investors. If you look at the movement of the share prices of this PSU giant, it is indeed, on a roll ! It registered a smart single day rise of almost seven percent. What are the reasons behind it ? As I explained in one of my articles titled “Investing profitably in Bonus Shares” that such a phenomenon is not unusual on the day of announcement. In the case of EIL , it is one of those rare opportunities worth looking at!
I have already mentioned that as far as the financials of the EIL are concerned , it is in an excellent shape and riding on its tremendous performance the government via CCEA meeting yesterday has already cleared the proposal to go for 10 percent off -load of its shares and more importantly, the company would be issuing two bonus shares for one share held. Isn't it very generous? But then look at its reserves! It's overflowing! On the top of it there would be payment of dividend at the rate of 1000 percent.
Now let us take a quick look at its performance in all respects . In September its share was hovering around at Rs 1525 which rose to high of Rs 1784 on 14th January this year. The market capitalization figures stands at Rs.8563.81 crore. For the quarter ended September 30 it clocked a turnover of Rs 468 crore, a rise of 36 percent over the corresponding quarter of the previous year. For the six months ended on September 30 its turnover stood at Rs 859 crore, a phenomenal growth of forty four percent over the corresponding period of the previous year.
A perfect growth story!
Now I would conclude this piece on a personal note . As I firmly recommended in the earlier article that prudent investment in bonus candidates could be very rewarding based on my personal experience. Mind you I am no expert in this! In the month before last month I nearly risked losing one of my friendships. One of my friends sought my suggestion for a few prospective companies for investment and I was too quick in suggesting NUMERIC POWER LIMIMTED which was quoting at around Rs 255 and he picked up at that price. Thereafter my woes started, whenever we met after that he would not even exchange a smile as the scrip plunged almost 2 percent which is not at all uncommon. But I remained confident all along about its performance based on my study of its financial performance and growth potential. Today it is being quoted at Rs 325! On an investment of nearly Rs 26,000 some two months back if he sells off his stake , he can make a profit of more Rs.5000. How much is the percentage ? I leave it to you to work it out!!