1:10 Bonus Issue, 12000% Returns, 10:1 Stock Split: Multibagger Penny Stock Promotors Offload Stake; BUY?

Pulsar International Limited has announced a 1:10 bonus share issuance. The company, which has seen significant growth in recent years, revealed that its Board of Directors approved the issuance of one new equity share for every ten shares currently held by existing equity shareholders. This development comes on the back of a recent stock split.

A bonus share issuance is a corporate action where a company issues additional shares to its existing shareholders at no extra cost, essentially rewarding them for their loyalty. In the case of Pulsar International, for every ten shares that a shareholder owns, they will receive one additional share. This bonus issue will be drawn from the company's free reserves and is expected to be credited or dispatched within two months following the Board's approval. The record date, which will determine which shareholders are eligible for this bonus, will be announced at a later date.

This bonus share announcement closely follows the company's earlier stock split, which took place on April 19, 2024. The stock split involved subdividing every 1 equity share with a face value of Rs 10 into 10 equity shares with a face value of Rs 1 each. This move was aimed at increasing liquidity by making the shares more affordable and accessible to a broader base of investors. Stock splits and bonus issues are often seen as signals of a company's robust financial health and are typically welcomed by investors.

Founded in 1990, Pulsar International Ltd has undergone a transformation over the years. Initially focused on trading, imports/exports, and consultancy services, the company has since pivoted to derive its primary revenue from consultancy fees and the sale of work contract materials. This shift in business focus has contributed to the company's financial performance and stock market returns.

Currently, Pulsar International has a market capitalization of Rs 87.6 crore, and its stock has been on an upward trajectory. Over the past three years, the company has achieved a compound annual growth rate (CAGR) of 310% in its stock price. Additionally, the stock has delivered multibagger returns of over 120% from its 52-week low of Rs 6.08 per share. In a span of three years, it has soared by 7000%, and over five years, it has risen by 12174%.

In June 2024, the company's promoters sold 7,67,862 shares, reducing their stake from 10.44% in March 2024 to 9.26%. While this reduction in promoter holding might raise some eyebrows, it's important to note that the company remains in a strong financial position. Pulsar International Ltd is debt-free, with no loans or interest payments.

For existing shareholders, the 1:10 bonus share issuance is a positive development, offering them additional shares without any cost, effectively increasing their holdings. This move, coupled with the recent stock split, reflects the company's commitment to enhancing shareholder value.