Autoriders International: Why is this Mukul Agrawal stock showing an 83% fall today?

Shares of Autoriders International Limited, which has a market cap of Rs 295 crore, witnessed a sharp fall on Tuesday. The stock plunged nearly 83.3 per cent to Rs 849.45 on the BSE. While this drop might appear alarming to investors, it was purely a technical adjustment as the stock began trading ex-bonus.

The 83 per cent decline does not reflect a fundamental loss in value but is an adjustment for the company's 5:1 bonus issue. In fact, after the price adjustment, the stock showed strength in early trade, rising to Rs 849.45. The real price change is this modest movement, not the large notional drop. As of 12:15 PM, the stock was trading just 0.02 per cent lower at Rs 849.45 on the BSE.

The company's board had approved a bonus issue in the proportion of 5:1, meaning five new bonus equity shares for every one existing equity share held. The company fixed November 18 as the record date to determine the members eligible for this allotment.

Because today is the ex-bonus date, the share price has been adjusted to reflect the increase in the total number of shares. The stock, which had a previous close of Rs 5,097, saw its price adjust to an opening of Rs 849.45. This adjustment ensures that while shareholders receive five additional shares at no cost, the total value of their investment remains the same at the time of the adjustment.

Autoriders International is notably tracked as it counts ace investor Mukul Mahavir Agrawal among its key shareholders. According to the shareholding pattern for the September quarter, Agrawal holds a 10.56 per cent stake in the company, which amounts to 61,250 shares.

The stock has delivered multibagger returns for its long-term investors, rising from a level of Rs 25 to its current adjusted price of Rs 849 on BSE.

Autoriders International is primarily engaged in the rent a car business. It has been providing services, majorly to corporate business houses, for the past three decades.