1:10 Stock Split, First Ever: Not IRFC Or RVNL, But This Penny Railway Stock Is Debt-Free, Gains Momentum

A penny stock in the railway basket is set to split for the first time ever. This penny stock has a market cap below Rs 1,000 crore, however, is trading around Rs 450 levels, warranting a sub-division to improve liquidity and become affordable for new and existing customers. One of the key positive factors is that the railway company is debt-free and has gained momentum with the upside of over 2% in 5 days.

YTD, this railway stock has been in a bearish tone with a downfall of 38% on BSE. In a year, the stock is down by 42%. In the short-term criteria, the stock is lower by 28.41% in six months, and down by 8% in a one-month period. However, in the last five consecutive trading sessions, the stock has witnessed bullish momentum, as investors await for stock split record date.

The stock has gained by at least 2.2% from September 5-11, during trading sessions. The highest gains are seen in the September 11 session.

On Wednesday, September 11, 2024, the stock price gained by Rs 8.55 or 1.95% on BSE to end at Rs 446.70 apiece. During the day's trading hours, the stock zoomed by 3.3%.

Although, the stock is still near its 52-week low of Rs 408 apiece, but the latest gaining momentum, signals a turnaround in the stock. Its 52-week high is at Rs 863.35 apiece.

Who is it? Not the railway large-cap giants like IRFC or RVNL. But instead K&R Rail Engineering.

As per Trendlyne data, KR's Debt to Equity Ratio is zero as the company is debt-free. This is not the case with the above-mentioned railway giants. As of now, RVNL has a Debt to debt-to-equity ratio of 0.68 is less than 1 and healthy, which implies that its assets are financed mainly through equity. On the other hand, IRFC has Debt to Equity Ratio of 8.38 is higher than 1.

Also, KR's return on equity is stable at 12.95%. Its Interest Coverage Ratio is 9.51, higher than 1.5, meaning that it can meet its interest payments comfortably with its earnings (EBIT). Also, Promoter Pledges are zero.

KR Rail Engineering shares are overvalued. As per Alpha Spread data, the intrinsic value of one KRRAIL stock under the Base Case scenario is 141.44 INR. Compared to the current market price of 428.65 INR, K&R Rail Engineering Ltd is Overvalued by 67%.

KR Rail Engineering Stock Split:

K&R Rail has announced its first-ever stock split in the ratio of 1:10. This means that the company will subdivide its 1 existing equity share having a face value of Rs 10 into ten smaller shares having a face value of Re 1 each fully paid-up.

K&R Rail is yet to set the Record Date for the subdivision of equity shares. The reason behind the stock split is to enhance the company's liquidity and encourage the participation of small investors by making it more affordable.

The company is expecting to complete its stock split action in approximately 3 months from the date of receipt of approval from the shareholders of the company.

So most likely we can expect the split to take place somewhere around October.

K&R Rail Engineering was founded in 1998 with a vision to cater to the ever-growing demand for Mass Transportation & Bulk Logistics of Goods & Materials through the Indian Railway networks.