Lucky Cement (LUCK) Stock Split: What you should know

Key Takeaways

• Lucky Cement (LUCK) has announced a 5-for-1 stock split, increasing the total number of shares from 293 million to 1.465 billion.
• The stock split will reduce the face value of each share from Rs10 to Rs2, making shares more accessible to retail investors.
• Shareholders will receive 5 shares for every 1 share held, with the date of record to be finalized at the Extraordinary General Meeting (EoGM) on March 18, 2025.
• LUCK is currently trading at a FY25E P/E of 5.4x, significantly lower than its 10-year average P/E of 10.0x, making it an attractive investment.

Lucky Cement Ltd. (LUCK) has announced a 5-for-1 stock split, a move that will increase liquidity and attract a broader investor base. This decision will increase the total number of shares from 293 million to 1.465 billion, while reducing the face value per share from Rs10 to Rs2.

The stock split will not change the total equity value of the company. Instead, the price per share will adjust proportionally, making it easier for smaller investors to buy shares. The final record date for the split will be confirmed at the EoGM on March 18, 2025.

Why is LUCK Implementing a Stock Split?

A stock split does not impact the company’s fundamentals but brings several benefits:

• Increased liquidity, making it easier to trade shares.
• Wider investor participation, especially from retail investors who may find high-priced shares difficult to purchase.
• Better price discovery, as more investors engage in trading.
• Market alignment, as stock splits are a common strategy used by companies to maintain affordability.

Unfortunately stock splits are not very common in the PSX and therefore the handful occasions where companies have split their shares are not enough to make any conclusion regarding performance post-split.

However, in general, stock splits result in increased perceived attractiveness helping drive returns and higher valuations.

LUCK’s Market Performance & Growth Prospects

Current Market Valuation

• LUCK is currently trading at a FY25E P/E of 5.4x and FY26F P/E of 4.8x, compared to its 10-year average P/E of 10.0x.
• Dividend yield remains stable at 1%, indicating consistent shareholder returns.
• Return on Equity (ROE) is projected to be 23% in FY25 and 22% in FY26, showing strong profitability.

Earnings & Growth Outlook

• EPS is expected to rise from Rs223.7 in FY24 to Rs290.3 in FY26.
• Earnings growth is projected at 16% in FY25 and 12% in FY26, indicating sustained business expansion.

These metrics highlight LUCK’s strong financial position, making it a compelling stock for long-term investors.

Conclusion

LUCK’s 5-for-1 stock split is a strategic decision aimed at improving liquidity and increasing investor participation. With a strong financial outlook, low P/E valuation, and robust earnings growth, the company remains an attractive investment in Pakistan’s cement sector.

As the EoGM date approaches, investors should closely watch LUCK’s performance, as this move is expected to enhance market activity and drive further stock momentum.

Source: Topline Research, PSX