1:10 stock split effect: Multibagger SME stock turns ₹1.50 lakh of IPO allottees into ₹51 lakh in 9 years

SME stock Hi-Tech Pipes have given exceptional to its investors in the long term. Investors who had invested ₹1.5 lakh in its IPO in February 2016 would have turned ₹51 lakh till now.

Stock Split and IPO details

Hi-Tech Pipes announced a stock split in January 2023, reducing the face value of each share from ₹10 to ₹1, effectively splitting one share into ten. The record date for the split was set as March 17, 2023. This move aimed to enhance stock liquidity, make shares more affordable to small investors, increase public participation in shareholding, and widen the shareholder base. Shareholders holding the stock in their demat accounts as of the record date were eligible for this benefit, resulting in a substantial enhancement in effective returns.

Hi-Tech Pipes launched its IPO as a fixed-price issue, raising ₹13.65 crore. The bidding period for the IPO spanned from February 15 to February 19, 2016, and the shares were subsequently listed on the NSE SME platform on February 25, 2016. The IPO price was set at ₹50 per share, with a minimum application lot size of 3,000 shares. As a result, retail investors needed to invest a minimum of ₹1,50,000 to participate in the offering.

₹1.5 lakh to ₹51 lakh

If an investor had remained invested in the scrip after share allotment, its minimum shareholding in the company had been 3000 company shares, which was lot size of the IPO. After 1:10 stock split in March 2023 at BSE, an allottee's shareholding would have surged 10 times or say 3000 x 10 = 30,000. Stock price today is around ₹170, which means absolute value of one's ₹1.50 lakh ( ₹50 x 3000, which was minimum money required to apply for the NSE SME IPO) had surged to ₹51 lakh ( ₹170 x 30,000).

Stock Price Trends

The SME stock has demonstrated strong performance over the past year, gaining 50 percent. In 2024 year-to-date (YTD), it has risen by 48 percent. However, recent months have seen some declines, with the stock shedding nearly 7 percent in November, marking its third consecutive month of losses.

Hi-Tech Pipes achieved a record high of ₹210.75 in September 2024 but is currently trading at ₹167.90, over 20 percent below its peak. Despite this, it has surged 72 percent from its 52-week low of ₹97.60, recorded in December 2023, reflecting its resilience in the face of market fluctuations.

Recent Developments

Hi-Tech Pipes has made significant strides in branding and fundraising. The company recently appointed Bollywood celebrity Hrithik Roshan as its brand ambassador, leveraging his widespread popularity to strengthen its consumer connection. "We are delighted to welcome Hrithik Roshan to the Hi-Tech Pipes family. His immense popularity and positive influence align seamlessly with our commitment to delivering superior products and services. We believe this collaboration will strengthen our connection with consumers and drive growth," said Ajay Kumar Bansal, Chairman and Managing Director of Hi-Tech Pipes Ltd.

Additionally, in October 2024, the company successfully raised over ₹500 crore through a Qualified Institutional Placement (QIP). The QIP received robust participation from leading domestic and international institutional investors, including Motilal Oswal Fund, Bandhan Mutual Fund, and LIC Mutual Fund. A total of 26,996,734 new equity shares were issued at ₹185.50 per share.

Earnings Performance

Hi-Tech Pipes reported a consolidated net profit of ₹18.11 crore in the September 2024 quarter, a 72 percent year-on-year increase from ₹10.52 crore in the same quarter of the previous year. However, revenue from operations declined by 5.3 percent to ₹706.86 crore due to a steep reduction in raw material prices. Despite this, sales volumes rose 22.50 percent to 1.23 lakh tonnes, driven by strong demand for steel tubes, structural steel products, and value-added offerings.

Ajay Kumar Bansal commented, "In Q2 FY25, our total sales volumes increased by 22.50 percent, reaching 1.23 lakh tonnes, driven by strong demand for steel tubes, structural steel products, and value-added products."

Hi-Tech Pipes continues to showcase robust growth and strategic advancements, capitalizing on industry opportunities and innovative measures like stock splits and celebrity endorsements. While the stock has faced some recent volatility, its long-term trajectory remains promising, driven by strong fundamentals, expansion in sales volumes, and investor confidence. For existing and potential investors, the company’s ongoing developments signal a firm commitment to sustained growth and market leadership.

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