Castrol on smooth ride
Castrol is up in the green today, up currently over 3.6% at Rs.331, with an intra day high at Rs.334. Volumes are robust at 37,000 shares compared to 26,000 shares over past two weeks average.
The stock is up after the company a different kind of a bonus to its shareholders. It announced a reduction in its share price from Rs.10 to Rs.5 and instead of adjusting this into the share capital, the company , in a first of its kind move, returning the remaining Rs 5 to its shareholders and reducing the share capital. After the offer, the share capital of Castrol will be reduced to Rs 247.28 crore from the current Rs.494.60 crore. Shareholders will also be exempted from any tax liability. This is a fantastic way to return excess cash to the shareholders, without bloating up the share capital through a bonus issue. As at 31st Dec’12, the company has cash of Rs.575 crore and reserves of Rs.155 crore.