10 Bonus Shares, 1:2 & 1:5 Splits; Smallcap Steel Stock Below Rs 15, Falls 10% In 5 Days; Plans FPO Ahead

Iron & steel products maker, Rama Steel Tubes has been in a bearish tone for five consecutive trading sessions, falling by nearly 10% so far. This comes ahead of its fundraising plan via further public offer (FPO) which will be considered by the board of directors in a meeting scheduled on April 22.

Rama's shares have recently turned ex-bonus for a 2:1 bonus issue. However, so far in its history, the company has delivered 10 bonus shares in three intervals with the latest being in March 2024. The first bonus issue was of 4:1 in March 2016, followed by another 4:1 bonus issue in January 2023, and the latest being 2 bonus shares on 1 existing share.

Further, Rama Steel shares have split twice. Firstly, a 1:2 split ratio was carried out in March 2016, followed by another 1:5 ratio in August 2022. So far, 1 share of Rama Steel has been split into 7 equity shares. Its face value is now Rs 1 from the first Rs 10 face value each.

Also, the company has declared 1 dividend in its history. It paid a dividend of Rs 0.50 per share for which it turned ex-dividend in February 2022.

On BSE, Rama Steel's share price stood at Rs 12.02 apiece, down by 1.5% with a market cap of Rs 1,779.04 crore. The smallcap has been in red for five consecutive trading sessions since April 9, 2024. The stock was last in green on April 8 when its share price stood at Rs 13.32 apiece.

The stock's 52-week high and low is Rs 16.82 apiece and Rs 9.84 apiece respectively. In a year, the stock has gained by 14.5%.

As per the regulatory filing, it's fundraising via FPO will be the next big sentiment driver in the stock price.

It said, "A meeting of the Board of Directors of the Company is scheduled to be held on Monday, April 22, 2024, to transact the following business:

- To consider the proposal for raising funds by way of further public offer as may be permitted under the applicable law, subject to such regulatory/statutory approvals as may be required.

- Any other transaction with the approval of the Chair."

What are FPOs? As per Nirmal Bang, FPO abbreviated as Follow-on Public Offer is a process in which an existing company listed on the stock exchange issues new shares to the existing shareholders or the new investors.

It is different from an IPO where the company issue its shares to its public for the first time to collect funds to grow its business, the brokerage added.

Moreover, the brokerage also explained that the reason behind the company performing an FPO is to expand its equity base. The company uses FPO only after the company has started the process of an IPO to make its shares available to the public and to raise capital for their business.

Rama Steel Tubes Limited (RSTL), a pioneer and a leading manufacturer of steel pipes, G.I. pipes and tubes in India, proudly announces a significant milestone in its financial strategy.

Last week, on April 8th, Rama Steel announced the further successful reduction in total bank loans, marking a substantial achievement in our journey towards financial stability and growth. Through diligent financial management and strategic decision-making, RSTL has further reduced its total sanctioned Bank loan limits by Rs 737.40 Million which is 21% of the total existing sanctioned limits over the month.

During the year company has reduced total sanctioned loan limits by Rs 1,897.20 Million which is 55% of the total existing sanctioned loan limits, including Lepakshi Tubes Private Limited. This accomplishment underscores its commitment to strengthening our financial position and enhancing shareholder value.