Abans Enterprises Ltd. Announces 1:5 Stock Split: Key Dates, Price Targets, and Financial Insights

Abans Enterprises Ltd. Announces 1:5 Stock Split: Key Dates, Price Targets, and Financial Insights

Abans Enterprises Limited is one of the stalwart companies in commodities and financial markets as well. News has just started coming in that it would declare a 1:5 stock split. The move is said to make the company’s shares accessible to a large number of investors. The date for recording will be 15th October, 2024. There is an intention to exercise that split effective so that the shareholding right for the shareholder on that date can be ascertained. It seems the Company does it, as a method to infuse liquidity and attract more retail investor since the value of a stock is brought down to one-fifth of the market price it enjoys; at the same time, market capitalization remains the same.

We briefly look at the information provided on Abans Enterprises, including details on its stock split, financial performance, primary resistance and support levels, and target stock price or prices other than as an understanding of the business operations of the company.

Abans Enterprises: Overview

Abans Enterprises Limited was incorporated on February 2, 1985. It has been an early mover in the Indian market. The firm primarily trades commodities, agri-commodities, precious metals, shares, currencies, and other diversified derivatives. The company is listed at BSE Limited and Metropolitan Stock Exchange of India Limited (MSEI) and it trades on all the major exchanges in India. The diversified entities within the spot markets expand further into the trading portfolio of Abans Enterprises.

What does 1:5 stock split mean in words to an investor? It simply means the existing equity share of face value of Rs 10 is divided into five shares with a face value of Re 2 apiece. Subdivision of shares doesn’t change the value of an investor’s holding but the price of that particular share comes tumbling down, and it becomes accessible to retail investors.

As the company puts it in its filing with the regulatory body:

“In order to enable you to inform respective Equity Shareholders, that the Board of Directors of the Company has resolved to establish Tuesday, 15th October, 2024 as the ‘Record Date’ for determining the entitlement of Equity Shareholders for the purpose of sub-division/split of existing Equity Shares of the Company, so that 1 (one) equity share having face value of Rs. 10/- (Rupees ten only) each, fully paid-up, be sub-divided into 5 (five) equity shares having face value of Rs. 2/- (Rupees two only) each, fully paid-up, ranking pari-passu in all respects, which was approved by the Equity Shareholders through Postal Ballot on September 14, 2024.”

That is, for every share a shareholder currently holds as of October 15, five new shares will be issued at a price that will be lower but carrying the same market value as that of the original share.

Abans Enterprises: Performance Metrics

Apart from bifurcating the stocks, the company has done wonders in providing financial facts. The quarter-to-quarter show was mixed with a lot higher profitability and a thin dip in sales. Here are the takeaways from its financial performance:

Net Profit: Abans Enterprises’ net profit increased 33.73% YoY, growing from Rs. 3.32 crore in Q1FY23 to Rs. 4.44 crores in the June 2023 quarter.

Sales: The sales also declined in the quarter. Sales revenues of the company lowered by 8.10% at Rs. 257.22 crore compared with Rs. 279.88 crore of June 2023 quarter. These may be factors related to market and economic volatility prevailing in commodity trading.

EBITDA: The EBITDA of the company remained healthy with a growth rate of 22.46% and progressed from Rs. 7.79 crore in the three months June, 2023 to June, 2024 to Rs. 9.54 crore. Which thereby means this bottom line is improving with better efficiency in the operations for the company.

EPS of Abans Enterprises increased from Rs. 2.57 during Q1 FY24 to Rs. 3.18 in Q1 FY25, thus indicating a good message about profitability as well as the value creations done for its shareholders.

Critical date to watch:

 October 15, Record date.
In terms of the record date, stock split has been declared on October 15, 2024. Under this scenario, shareholders holding shares up to and including the record date shall be entitled to the split. Share holdings would thus be of major importance to investors and shall be held before the ex-date. It is one business day prior to the record date.

Even the date at which a stock split is declared should do pretty well for these objectives as seen from the point of view of attracting more investors, particularly the retail investor who may not consider the previous level of price of a stock to be relatively cheap.

Resistance and Support Levels:

Technical Analysis
Fact: Market analysts say Abans Enterprises is in overbought territory and can face some downward pressure in the near term. The stock trades close to a very strong resistance level at Rs.172.
Resistance Level: Rs.172
Support Level: Rs.157
If the share price goes below the support price of Rs 157, it may go down to as low as Rs 135, claims independent research analyst A R Ramachandran. That will be a huge short-term correction for the benefit of investors looking at cutting losses and booking profits.

Price Targets and Market Outlook

The stock is overbought on daily charts, and hence investors need to be cautious. Analysts feel that holders of the stock may look to book profits at these current levels. If the stock fails to sustain above Rs 157, then a bearish trend can be expected with the target at Rs 135 in the near term.

Long-term prospect is bright with the company and its smart moves, like a stock split, backed by a pretty strong financial structure. The stock should attract buying interest post-split, especially by retail investors, thus putting an upward pressure on the share price.

Eraaya Lifespaces and Strategic Growth

More important, there is an entry into real estate through the company ERAAYA LIFES PACES. The shares have also risen by 5 percent in recent times led by strategic events and announcements relative to the real estate project. Responses to the real estate project depict attempts at diversification on the part of the company-translation of revenue-generating businesses outside traditional trading operations that would subsequently improve long-term growth prospects.

Conclusion

Brilliant Future in Store for Abans Enterprises
A 1:5 stock split should make the shares of Abans Enterprises come within a better reach to investors. Mixed signals are indicated from the technical analysis where it is continuously testing its key resistance and support levels and, essentially, is positive in the long run due to the proper performance and strategic plays through real estate with Eraaya Lifespaces.

This will be in favor of the prevailing shareholders, as increased liquidity and potential price action are most likely to come out of the stock split. Therefore, investors need to track 15 October as a record date and market conditions to sell or hold on to their shares accordingly.
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Disclaimer:

All above recommendations are of the market analysts. Neither the author, nor the brokerage firm, nor Stockstoday.in will be responsible for any loss arising out of any such decision taken based upon this information. All users are cautioned to take their own expert advice prior to making any investment decision.

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