Car & General Chief Executive Officer Vijay Gidoomal. [Courtesy] Car & General’s shares have staged one of the biggest short-term rallies in the history of the Nairobi bourse, lifting the wealth of its shareholders by Sh1.69 billion in two weeks.
The rally, which started on January 6 – a day after the firm announced the highest ever profit in its 86-year history – has seen the share outperform the Nairobi Securities Exchange (NSE).
The company, which deals in a range of power generation, engineering and automotive products, has come a long way.
After moving no volume in the first two days of trading this year and shedding 9.87 per cent of its value before closing as the top loser on the NSE on January 5, many investors may have been tempted to cut their losses.
But the climb in the share price from Sh30.60 on January 5 to Sh72.75 at the end of Thursday last week, has minted millions for investors in just two weeks. “We expected that there was going to be a market reaction because at the end of the day, we have promised a bonus, good dividend, and we have generated Sh22 million a share,” said Chief Executive Vijay Gidoomal.
“If you are generating Sh22 million a share per annum and you feel that that is sustainable, the share price should be much higher than the Sh30.60 before the (profit) announcement.”
The rally means the wealth of the firm’s top individual shareholder, Paul Wanderi Ndung’u, who holds an eight per cent stake, has risen by Sh135.3 million in 12 days of trading to stand at Sh233.52 million.
Other top individual shareholders, including Rakesh Prakash Gadani (2.1 per cent) and Chandan Jethanand Gidoomal (1.35 per cent), have seen the value of their stakes hit Sh61.34 million and Sh32.17 million respectively.
Another 81 investors with between 10,001 shares and 100,000 shares have seen their wealth rise to ranges of between Sh727,500 and Sh7.28 million. Car & General has seen a 138 per cent rally in its share outperform the NSE, which has shed 1.14 per cent since the start of the year.
This is after the firm bucked the trend of cash preservation mode that has been adopted by many companies to navigate the prevailing tough business terrain on the back of Covid-19 disruptions that have reduced consumer spending.
“What gives us confidence is that we have diversified streams of income that we feel are in a relatively […]