Rekha Jhunjhunwala-backed stock hits back-to-back 5% upper circuit in 2 days. Do you own?

On BSE, Singer India shares closed at ₹86.35 apiece up by 4.98%. This stock price level is both the new 52-week high and the upper circuit of Singer India as of now. The company’s market cap was around ₹463.83 crore.

On the previous day, Singer India stock had touched a 5% upper circuit and ended at ₹82.25 apiece.

Singer India stock has broadly witnessed a positive performance in the first two days of the current week. Last week, the stock witnessed a volatile trend. From December 12 to 14th, Singer India clocked back-to-back 5% upper circuit before correcting between December 15-16 as investors booked profit. Broadly, so far December month has been fruitful for Singer India as the stock has climbed by nearly 22% on BSE.

Year-to-date, Singer India shares have skyrocketed by over 40%. While in a year, the stock has zoomed by nearly 37%.

Why is Singer India stock rising?

The upside in Singer India stock took flight after the company’s board of directors in a meeting held on December 17 approved the preferential allotment issue of 7.48 million equity shares having a face value of ₹2 each aggregating to ₹56.828 crore to various investors. The preferential allotment will be done at a price of ₹76 per equity share. Notably, the allotment is subject to various approvals including from the company’s shareholders.

There is a total of 8 investors who will participate in the preferential allotment.

As per the regulatory filing, among investors who will subscribe in the preferential allotment are — K. Raheja to subscribe 5,26,315 equity shares; IIFL Private Equity Fund – Series 2 to subscribe 26,31,578 equity shares; Neeru Dhanpal Jhaveri to subscribe 30,000 equity shares; PGA Securities to subscribe 3,94,736 equity shares, Boon Investment and Trading Company to subscribe 3,94,736 equity shares; Rafique Malik Family Trust to subscribe 13,15,789 equity shares; Gauri Tandon to subscribe 6,57,894 equity shares; and Alpana S Dangi to subscribe 10 lakh equity shares.

In the filing, Singer India stated that the funds from the issue, if approved, will enable the company to strengthen its brand and distribution channels, fulfil its additional working capital requirements for the expansion of its businesses and enable investments in product design upgradation and system technology upgradation among others.

Rajeev Bajaj, MD of the Company said, “The development will go a long way in strengthening Singer brand presence as an international brand in India and provide impetus for future growth”

DAM Capital Advisors is the exclusive financial advisor for the company.

As of September 30, 2022, the promoter and promoter group of the company hold a 35.31% stake in the company, while 64.69% stake is of public shareholders.

Among public shareholders, Rekha Jhunjhunwala holds major stakes in the company to the tune of 42,50,000 equity shares or 7.91%. Singer India is the new addition to Rekha’s portfolio and took place in the second quarter of FY23 (July – September 2022).

As per Trendlyne data, Rekha’s shareholding in Singer India is valued at around ₹37 crore as of December 20th.

Singer India has two major business segments – Sewing Products and Home appliances. The company’s range of home appliances spans food processors, dry iron and steam irons, mixer grinders, Sandwich makers and toasters, hand blenders, etc. Meanwhile, its sewing products are marketed under the brand “Singer” & “Merritt” with showrooms, distribution networks, and a very strong after-sales service network in Pan India.