Allcargo Global Logistics Announces Stock Split and Interim Dividend

Allcargo Global Logistics Limited has informed the Exchange that the Board of Directors of the Company at its meeting held on November 09, 2009 has :

(1) Declared that the Members of the Company have approved the sub-division of the face value of equity shares from Rs.10 per equity share to Rs.2 per equity share and consequential amendments in the Memorandum and Articles of Association of the Company, by way of postal ballot voting with requisite majority. The Issued, Subscribed and Paid up share capital of the Company after sub-division is Rs. 249,622,530 divided into 124,811,265 equity shares of Rs.2 each fully paid.

(2) Declared an interim dividend @25% i.e. Rs.0.50 per equity share of Rs.2 each (equivalent to Rs.2.50 per equity share of Rs.10 each) on the sub-divided share capital of the Company for the financial year 2009; and

(3) Fixed November 20, 2009 as the Record Date to determine the eligibility of the Members of the Company for sub-division of equity shares and payment of interim dividend.

Our Inputs:

As you can see from the chart on this page this stock has had very less trading volume, like 500-2500 shares traded per day, and stock split will increase liquidity. The price/book value at 4.5 and price/earning at 19.5 are expensive. However, the company has been delivering consistent growth.

Since the company has announced interim dividend, it shows a shareholder-friendly board, and hence can own this stock for 1-2% of our portfolio. And if by any mood swings of the stock market (which happen every once in a while), the P/E for this stock comes down to 13-14, it would become very attractive to buy further. This can deliver good returns over 5 year period.

Allcargo Global Logistics has a Joint Venture with Container Corporation of India Limited (CONCOR). The company had entered into this JV with CONCOR in 2007 for setting up Container Freight Station (CFS) / Inland Container Depot (ICD) at Dadri, Greater Noida in Uttar Pradesh for catering the container traffic of North India. Overall, the company has big plans under implementation for improving the warehouse infrastructure in India, which is much needed to support the 9% GDP growth.