Penny Stock Below Rs 60: 1st Ever 10:1 Stock Split Announced; A Buying Deal For Investors?

A BSE-listed company with ISO certification, New Light Apparels Ltd. specialises in producing uniforms and tailored apparel. It provides clients all around the world with premium business apparel, sportswear, and school uniforms. The market cap of New Light Apparels reached Rs 42.80 Cr and the penny stock closed today at Rs 54.72 level on BSE after the company announced its first-ever stock split in a 10:1 ratio on Tuesday.

New Light Apparels Stock Split

The Board of Directors has approved and considered the "Approval for stock split (sub-division of equity shares) of Company's 01 (One) equity share of face value of Rs. 10/- each into 10 (Ten) equity shares of face value of Rs. 01/~ each, subject to the approval of shareholders to be obtained at the ensuing Annual General Meeting to be held on 23rd September, 2024 and other approvals as may be required. In this respect, the record date shall be decided by the board and will be intimated to exchange," said New Light Apparels in a stock exchange filing on Tuesday.

"The current Authorized Share Capital of the company is Rs. 10,50,00,000 (Rupees Ten Crore Fifty Lakhs Only) which is proposed to be increased to Rs. 30,00,00,000 (Rupees Thirty Crore Only) subject to the approval of shareholders to be obtained at the 29th Annual General Meeting (AGM) of the company scheduled to be held on Monday, 23rd September, 2024 at 12:30 P.M. (IST)," New Light Apparels further informed stock exchanges.

New Light Apparels Financials

The company's net sales rose by 21.46% to Rs. 0.72 crore in the June 2024 quarter from Rs. 0.59 crore in the comparable June 2023 quarter. Its net profit increased by 123.02% from Rs. 0.01 crore in Q1FY24 to Rs. 0.03 crore in Q1FY25. In the June 2024 quarter, EBITDA was Rs. 0.04 crore, which was flat as recorded in the June 2023 quarter.

New Light Apparels Share Price Target

"New Light Apparels Ltd. is a micro-cap in the textile sector that is currently trading at Rs. 54.72, displaying a spectacular 1-year gain of +189.27%. However, with a high PE ratio of 117.71 compared to a sector average of 20.38 and a P/B ratio of 3.64, the stock is trading at a premium. Notably, the ROE stands at -30.21%, indicating instability and a negative return on equity. According to technical indicators, the stock is overbought with its RSI above 70 on daily, weekly, and monthly timelines. This also signals room for a potential price correction. Despite an upcoming stock split announcement on August 29, 2024, which could attract market interest, the high RSI and negative ROE signal caution. Hence, I advise investors and traders to wait for prices to fall, considering how risky this investment could be for them. Based on these aspects, I do not see any investment opportunity in this stock," V.L.A. Ambala, a Research Analyst (SEBI Registered), Co-founder - Stock Market Today (SMT) stated.

"New Light Apparels is bullish but also extremely overbought on the Daily charts with next resistance at 62. Investors should keep booking profits as a Daily close below support of 51 could lead to a target of 45 in the near term," A R Ramachandran, Independent Research Analyst recommended.

Disclaimer

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