Shares of Responsive Industries, the country’s leading manufacturers of vinyl flooring and synthetic leather, have witnessed a strong rally in the last few sessions amid a positive development. The rally in smallcap stock was driven by the board approval to the amalgamation of Axiom Cordages with itself.
Last week, the company informed exchanges its board had approved a revised scheme of amalgamation of its subsidiary, Axiom Cordages. Upon amalgamation, Responsive will allot 100 shares for every 81 shares held by others in Axiom. The consolidation by way of amalgamation would provide greater integration and flexibility to the company and strengthen its position in the Indian flooring market.
Shares of the vinyl flooring manufacturer zoomed more than 70% in the last four sessions amid heavy volumes despite holiday-thinned trading in the boarder market. The market capitalisation of the company rose to ₹4,644.28 crore.
Responsive Industries’ shares rallied as much as 71.2% from the December 28, 2021 closing price of ₹106.85 to a day’s high of ₹182.90 today. The stock has risen 73% over the past one month and 20% during the last six months. Despite a stellar rally in the recent past, the stock has delivered negative returns of 7% in the past one year, while it surged 158% over the last five-year period.
On Monday, the smallcap stock was trading 2.6% higher at ₹174.30 apiece as of 10:20 AM, after opening a tad lower ₹167.45 against the previous close price of ₹169.95. During the day’s trade so far, the share gained as much as 7.6% to hit an intraday high of ₹182.90. Meanwhile, the benchmark index BSE Sensex was up 0.9% at 58,771 points.
The stock was trading 13% below its 52-week high of ₹200.6, touched on March 12, 2021. The company’s share had hit its 52-week low of ₹98.05 on December 1, 2021. The stock was trading higher than the 5-day, 20-day, 50-day, 100-day, and 200-day moving averages.
On the volume front, there was a spurt in volume trade as 1.06 lakh shares changed hands over the counter in the first hour of trade as compared to two-week average of 1.13 lakh scrips. The delivery volume of 5.16 lakh on December 31, 2021 has surged by 160.4% against the 5-day average delivery volume, which indicates higher investor confidence, according to data available on stock research platform Markets Mojo.
As per the stock research platform, the stock is technically in a mildly bearish range, moving away from bearish on 29 December 2021 at ₹127.55. Responsive has weak long term fundamental strength with a negative compound annual growth rate (CAGR) of 19.60% in net sales over the last five years. It had declared negative results in the September quarter of 2021 after three consecutive positive quarters.
For the second quarter ended September 30, 2021, Responsive's net profit fell by 16% to ₹4.85 crore as compared with ₹5.77 crore profit in the year-ago period. Total income was flat at around ₹110 crore.
On a half-yearly basis, the company posted a net profit of ₹6.60 crore against a net loss of ₹4.13 crore for the half-year ended September 2020. Total income jumped by 14.7% to ₹180.93 crore in H1 FY22 from ₹157.72 crore in H1 FY21.
Responsive, which is engaged in the business of manufacturing and selling of products made out of plastics and polymers, is the number one vinyl flooring manufacturer in India> This product is used in many B2B segments such as healthcare, education, hospitality, sports, industry, commercial, offices, retail, bus, railways, and public buildings. Vinyl flooring is a $15 billion global business and growing at a CAGR of 5-7% annually.
