Why Power Mech Projects shares are showing 50% fall on some mobile trading apps

Power Mech Projects Ltd shares turned ex-bonus in the ratio of 1:1 today. Adjusted of bonus issue, the Power Mech Projects stock was trading 0.73 per cent lower at Rs 3,101 on BSE. But it was down nearly 51 per cent over yesterday's closing price (unadjusted) of Rs 6,293.95. It is possible that trading apps of certain brokerages might be showing the unadjusted Power Mech Projects price for yesterday and, thus, suggesting a 50 per cent-plus fall on the counter.

Since October 8 is also the record date, the company will determine such eligible shareholders today only. The bonus share would be credited to investors soon.

A bonus issue increases the number of outstanding equity shares, but reduces share price in proportion to number of bonus shares issued.

Bonus shares are issued from free reserves and surplus of the company, with the aim of increasing liquidity on the counter. In the case of Power Mech Projects, the bonus ratio was set at 1:1, which means one new fully paid-up share of Power Mech Projects would be issued to existing shareholders for every one share they held.

Power Mech Projects would eventually issue 1,58,08,146 shares of face value Rs 10 each. They would be issued out of securities premium account available based on audited financial statements of the company as on March 31, 2024.

Power Mech Projects had a balance of Rs 1,791.27 crore as free reserves & securities premium, as per audited financial statements on March 31, 2024.

Power Mech Projects recently incorporated a new wholly-owned subsidiary with the name “Power Mech Arabia Contracting Company” in Saudi Arabia. The company will engage in the repair and maintenance of equipment for Power plants, oil and gas facilities, and desalination plants.

The company last month received an order worth Rs 226.66 crore, excluding GST) related to Comprehensive Operations and Maintenance (O&M) partner for Gujarat Mineral Development Corporation Limited’s 250 (2X125) MW Akrimota Thermal Power Station (ATPS), Gujarat.