Rs 6/Share Dividend: GNA Axles Revises Record Date Of 60% Dividend Payout; Should You Buy This Smallcap Stock?

GNA Axles, which is among the leading manufacturers of automotive transmission components, touched a new 52-week high on Tuesday as focus shifts to its dividend payout to the tune of 60%. The company has revised its record date to determine eligible shareholders for the said dividend to September 2, 2023, from earlier August 11. And brokerage expects the stock to cross over the Rs 1,120 mark on exchanges. The company has a consistent track record of paying dividends to its shareholders.

At the time of writing, GNA Axles traded at Rs 977.90 apiece, up by Rs 38.85 or 4.14% on BSE. The stock had touched a fresh 1-year high of Rs 993.90 apiece earlier in the day. Overall, in the day, the stock zoomed by nearly 6%.

Year-to-date, the stock gained nearly 40% on BSE. While in a year, the upside is over 66.5% on the exchange. However, the stock emerged as a multi-bagger with its 5-year performance recording over 133% upside.

The company is set to pay a dividend of 60% aggregating to Rs 6 per share for FY23. This would be higher from the dividend payout of 50% or Rs 5 per share in FY22.

Companies usually fix a record date to determine the eligible shareholders for the dividend payout. In a regulatory filing on Tuesday, GNA Axles said, "We wish to inform you that due to some technical issue the record date for the payment of Dividend @ Rs. 6/- per Equity share on 2,14,65,400 Equity Shares of the company has been revised to Saturday September 2, 2023."

Earlier, the record date was fixed on August 11.

Hence, now, GNA Axles shares will turn ex-dividend on September 02, rather than August 11.

In its latest research note, B&K Securities said, "due to better demand from MNC customers like Escorts, John Deere, etc. on higher export orders, GNA is expected to continue to outperform the domestic tractor industry (new order wins from the spindles product with the existing customers to aid in outperforming the industry volumes). In addition to this, we expect a significant ramp-up in volumes from LCV/SUV segment on new customer wins."

In regards to the overseas market, the brokerage's note added, "We expect the Industry demand to remain stable in a full year. Expected increase in SOB with DANA Corp. to aid in better volume growth for the company."

Overall, the brokerage said, "we expect the company to report earnings CAGR of ~10% over the next two years (FY23-25E) on SOB increase with customers, new customer wins and ramp-up of production volumes from the SUV segment due to customer wins. Focus on SUV and off-road vehicle segment in the overseas market will act as a shock absorber for the company and will limit the decline in volumes in the downcycles. To support future growth, the company is expanding capacity by 2 mn units (to 8.7 mn units) by spending Rs 2.0 bn in the next two-three years. The company is expected to maintain EBITDA margins at levels of ~14.5%+ for the next two years."

It added, "We maintain a Buy rating on the stock with an unchanged target price of Rs 1,123."

From the current market price to B&K's target, GNA Axles stock price has the potential to rise nearly 15% ahead.

Disclaimer:

The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns. in advises users to consult with certified experts before making any investment decision.