Penny Stock Below Rs 60: New Light Apparels Announces 10:1 Stock Split – A Potential Buying Opportunity

ISO licensed company deals in school uniforms, business attires, and sportswear. New Light Apparels, a BSE-listed firm which deals in uniforms, readymade apparels and sportswear has announced its first-ever 10:1 stock split. With a market cap of Rs 42.80 Cr the stock was trading at Rs 54.72 prior to announcement. The Board of Directors has considered the proposal of stock split with an aim of liquidity enhancement through lowering the face value of each share.

Share Splitting Finds Favor of Shareholders Finally, the proposed share splitting has found favor with the shareholders during the Annual General Meeting of the company held on 23 September 2024. Under this, every share carrying a face value of Re 1 would be split to reconstitute it into 10 shares of face value Re 1 each, and thus, bring the stock into the periphery of the retail investor.

Why Stock Split?

Thus, it is a corporate action whereby the existing shares of a company are divided into several shares so that they become more economical for the investors, mostly retail participants. In the case under consideration, the New Light Apparels 10:1 stock split helps reduce the share price quite noticeably; thus, more people could buy shares at that affordable rate.

For a penny stock like New Light Apparels, trading below Rs 60, this is a good strategy to attract new investors. As of its last trade at Rs 54.72, the stock split would make it even more accessible, thus perhaps raising demand and liquidity.

About New Light Apparels Ltd.

New Light Apparels Ltd. has been one of the great players in the textile industry in India, offering uniforms, tailored business wear, sportswear, and school uniforms. ISO certification adds more strength to their reputation because they insist on upholding high standards of quality. They cater to sectors like educational institutions, corporate sectors, and sports teams with an endless variety of customized apparel.

New Light Apparels has established a great niche for the company in the Indian market with tailored apparel and uniforms. The stock has managed to attract investors with its low valuation and consistent appearance of the company stock in the market having a market capitalization of Rs 42.80 Cr.

Effect on Investors

The effect on investors about the 10:1 stock split can be very strong as follows:

Increased Affordability: Splitting the stock up to 10 shares per makes the share price come crashing down and opens its doors to huge retail participation in the market. The price drops to around Rs 5.47 per share from a stiff Rs 54.72 earlier.

Increased Liquidity:

Stock splits are also generally considered as beneficial for trading volumes since the shares being traded now are more at a lower price. The more liquid a stock is, the easier it becomes to buy and sell shares. Increased liquidity can be associated with added dynamism in the stock market.

Improved Perception of the Market: Stocks that split often come out as a status indicating the company is performing very well. As such, it is henceforth likely to attract different sorts of investors; consequently, this will increase its market value overtime.

More Retail Investors Access: With the share price coming low due to the split, more retail investors will gain access to buying shares. It would be at such a time that for penny stocks like New Light Apparels the demand would increase and the value of stock might rise due to participation from additional investors.

Role of the Board of Directors in Stock Splitting

Board of Directors at New Light Apparels Ltd. tactically opted for this split following an improvement in market activity. The stock split was sanctioned during the Annual General Meeting held on September 23, 2024. It had emerged as a move to make the stock more attractive to a larger base of investors, particularly those wanting to invest in higher growth ventures by acquiring low-cost stocks.

Thus, the company would be made even more liquid and attractive in the market by bringing down the face value of each share from Rs 10 to Re 1. Shareholder approval has set the board members into an orbit of confidence about the future expansion and sound financial health of the company.

Sub-division of shares stock split how it works

It goes like this: the number of stocks increases ten times for a 10:1 stock split and the price declines proportionate to the number of shares collected. Let’s take an example. An investor owned 100 stocks in New Light Apparels for Rs 54.72 per stock. After the split he will have 1,000 stocks, but now the price of each stock is worked out to approximate to Rs 5.47. The number of shares would increase but that investment owned does not change the following day after the split.

Share subdivision is strictly cosmetic for the short term but eventually would reap long-term profits because more investors become attracted to buying the stock due to their lower price point.

Key Financial Metrics and Market Cap

Basically, New Light Apparels is a small-cap or penny stock in the Indian stock market, with a market cap of Rs 42.80 Cr. From the financial performance point of view, the company would have relatively steady operations, and a stock split may give it the much-needed impetus for further increases in coming months. That will increase its base of investors as it makes stocks affordable and perhaps enhance the appreciation of its stock price over time.

Should I Buy or Sell New Light Apparels Ltd.?

It depends upon various factors in case you are an investor who will decide either to buy the new stock or sell the old one.
Growth Potential: New Light Apparels runs a business in the growing sector, particularly in uniforms, school dresses, and business suits. Tailor-made clothes and uniforms are likely to continue their demands and New Light would benefit from it.

Stock Split: The 10:1 stock split will make the stock much cheaper. This may lead to higher demand and therefore increase the price. Any buyer of the stock before the split gets rewarded with post-split growth.

Market Sentiment: The capital stocks that are of smaller size, such as New Light Apparels are always on the control of being well ahead in the market and how it gets building conditions around itself that surround the sector where it is placed. Moreover, the stock split is most likely to keep it in view of a large number of investors, but later on, external influences of economic conditions and volatility in the market can influence the stock of the company.

Long-term investment strategy: For the long-term investor, company ISO-certified customized clothing for schools, businesses, and even sports teams can be the road to stable long-term growth. Combining the positive stock split with market niche of the company of New Light Apparels makes it a very rewarding investment for those that are right about having a much long-term horizon.

Conclusion

New Light Apparels Ltd has announced a 10:1 stock split, which is expected to become effective from October 2024 after getting the nod at the Annual General Meeting scheduled on September 23, 2024. It could be a good time for investors as it currently trades as a penny stock at Rs 60. Stock split may eventually work towards furthering liquidity for the same share price of the stock and making it easier for the larger retail fraternity.

As the company is focusing on very high-demand items like school uniform, business attire, and sportswear, New Light Apparels should expect a good growth for the next two years. Being split shares could create a trigger for interest and investment, so it is worth keeping an eye on as a stock to watch.

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.