Bonus Share News: This microcap company’s shares increased by about 8% during Friday’s trading session following the announcement of a record date for the issuing of bonus shares in a 1:1 ratio. The shares have given its owners a multibagger return of 135 percent in just a single year.
Friday’s Trading Session Overview
The shares of Sinclairs Hotels, which have a market capitalization of Rs. 618 crores, began Friday’s trading session at a lower price than where they had closed the previous day—Rs. 227.90. The company’s new 52-week high was also reached by the shares, which are currently trading at Rs. 243.05 apiece. The shares gained about 8 percent to a high of Rs. 247.80.
Impact of Announcement
A significant increase in the share price was seen following the company’s announcement in an exchange filing that January 29, 2024, would be the “Record Date” for determining the eligibility of shareholders for the issuance of fully paid-up bonus shares in the ratio of 1:1, or one fully paid-up equity share for every one that is currently outstanding at Rs. 2.
Additionally, the business stated that the consent of the shareholders would be gained during the company’s January 18, 2024, Extra Ordinary General Meeting. On October 25, 2023, Sinclairs Hotels completed its third repurchase of 15,20,000 equity shares of Rs 2 apiece for Rs 200 per share equating to Rs 30 crores.
Purpose of Bonus Shares
Bonus shares are distributed by a firm to its shareholders in an effort to boost stock liquidity, lower stock price, and lower investment costs. Upon reviewing the company’s financial accounts, it can be seen that revenue dropped from Rs. 18.46 crores in the June quarter to Rs. 8.52 crores in the September quarter, a 52 percent decline. Furthermore, over the same period, net income decreased by 85%, from Rs. 8.48 crores to Rs. 1.27 percent.
Expansion Strategy
The company intends to buy or lease other sites in order to grow its chain. To take advantage of the cluster approach, the plan is to buy or lease properties that are close to the company’s current properties.
Sinclairs Hotels, with its main office in Kolkata, was established in 1971. Under the “Sinclairs Hotels & Resorts” name, it manages a chain of lodging facilities in the hospitality industry. The business owns and runs nine properties in different parts of India, such as Darjeeling, Ooty, and Burdwan.
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