Pashupati Cotsp. moves to reshape its capital structure

The specific reserve is not identified in the board outcome. The filing approves/recommends a 3:2 bonus issue but does not specify whether the capitalization will come from Securities Premium, General Reserve, Retained Earnings, or a combination. The issue remains subject to shareholder and other approvals, and the record date is to be announced later. ^{[1] [1]}

Post-allotment accounting effect

Using the latest reported consolidated base:

• Current equity share capital: Rs 15.78 Crores ^[2]
• Current total equity/net worth: Rs 164.10 Crores as of FY26 ^[3]
• Current book value per share: Rs 10.40 ^[4]
• Current shares outstanding: 157.84 million
• Bonus ratio: 3 shares for every 2 held ^[1]

Notes: † Derived mechanically from the 3:2 ratio, Rs 1 face value and the latest reported equity/share data. Post-allotment net worth assumes no intervening profit, loss, dividend, fresh issue or other balance-sheet movement.

Mechanics: the amount capitalized from reserves would be transferred within shareholders’ equity into share capital. It would not create cash or increase net worth. Because the share count rises by 2.5 times while net worth remains unchanged, book value per share correspondingly declines to approximately Rs 4.16.

The precise reserve ledger and the final post-allotment balance-sheet figures require the shareholder notice, allotment disclosure or subsequent financial statements; the board outcome alone does not establish whether Securities Premium, General Reserve or Retained Earnings will be used.

The new Authorized Share Capital ceiling is Rs 40 Crores, up from Rs 16 Crores—an increase of Rs 24 Crores. The board’s approval remains subject to shareholder and other necessary approvals. ^[1]

The 3:2 bonus issue means shareholders will receive three Rs 1 face-value shares for every two existing Rs 1 shares. Mechanically, the bonus therefore adds shares equal to 150% of the existing issued equity capital. ^[1] The revised Rs 40 Crores ceiling is meant to accommodate this expanded post-bonus share capital, with any unused portion available for later equity-linked actions such as further issuances or other capital requirements.

However, the filing does not disclose the existing issued or paid-up share capital, nor the precise rupee amount of equity capital to be created through the bonus. Therefore, the exact residual headroom after the 3:2 issue cannot be calculated from the disclosed figures. The strategic point is clear: the Rs 24 Crores increase provides capacity beyond the current Rs 16 Crores authorization, but the quantum of surplus capacity remains unquantified pending the company’s detailed capitalisation and shareholder approvals.

The proposed 3:2 bonus issue would increase Pashupati Cotspin’s share count by 2.5x, so historical EPS should be restated to 40% of the previously reported figure. Historical dividend per share, where presented on a comparable post-bonus basis, would follow the same 0.40x adjustment. The bonus is still subject to shareholder and other approvals, and the record date has not yet been announced. ^{[1] [1]}

Restatement mechanics

The authorized-capital increase from Rs 16 Crores to Rs 40 Crores provides headroom, but it is the 3:2 bonus issue, not the authorized-capital change, that changes the issued share count. For every two existing shares, shareholders would hold five after the bonus:

• Restatement factor = 2 / 5 = 0.40x
• Post-bonus EPS = pre-bonus EPS × 0.40
• Comparable post-bonus DPS = pre-bonus DPS × 0.40

The key distinction is that reported profit does not mechanically fall because of the bonus; the same earnings are spread across 2.5x as many shares. EPS is therefore expected to be retrospectively adjusted in comparative financial information. For DPS, the company may separately retain the original declared dividend rate while showing an adjusted per-share equivalent for comparability. A historical Rs 1.00 DPS, for example, would appear as Rs 0.40 on a post-bonus basis.

Capital-allocation comparison

The peer comparison below uses FY26 reported data. The evidence supports an observable payout pattern, not necessarily a formally stated dividend policy.

Pashupati Cotspin

Pashupati reported a consolidated FY26 dividend payout ratio of 0.0% and DPS of Rs 0.00. ^{[7] [6]} FY26 capex-to-revenue was only 0.1%, while net debt to EBITDA was 2.70x. ^{[8] [9]}

GHCL Textiles

GHCL Textiles reported zero FY26 payout and Rs 0.00 DPS on a standalone basis. ^{[10] [11]} Its FY26 capex-to-revenue ratio was 5.2%, with net debt to EBITDA at 0.86x. ^{[12] [13]}

Century Enka

Century Enka also reported zero FY26 payout and Rs 0.00 DPS on a consolidated basis. ^{[14] [15]} It combined this with FY26 capex-to-revenue of 2.2% and very low net debt to EBITDA of 0.07x. ^{[16] [17]}

Sunrakshak Industries

Sunrakshak reported zero FY26 payout and Rs 0.00 DPS on a consolidated basis. ^{[18] [19]} Its capital allocation was more expansionary, with FY26 capex-to-revenue of 9.7% and net debt to EBITDA of 0.49x. ^{[20] [21]}

Raj Rayon Industries

Raj Rayon reported zero FY26 payout and Rs 0.00 DPS on a standalone basis. ^{[22] [23]} Its FY26 capex-to-revenue was 4.1%, but leverage remained higher at 3.06x net debt to EBITDA. ^{[24] [25]}

United Polyfab Gujarat

United Polyfab reported zero FY26 payout and Rs 0.00 DPS on a consolidated basis. ^{[26] [27]} FY26 capex-to-revenue was 0.4%, while net debt to EBITDA was 1.97x. ^{[28] [29]}

Analyst interpretation

The bonus issue is aligned with the peers’ observed preference to retain cash rather than distribute regular dividends: every named peer reported zero FY26 payout and zero DPS. It is also non-cash from the company’s perspective, unlike a cash dividend.

However, the move should not be interpreted as proof of a stronger capital-allocation policy. Peer reinvestment intensity varies materially—from Century Enka’s low leverage and moderate capex to Sunrakshak’s much higher capex and Raj Rayon’s elevated leverage. The bonus primarily changes the denomination and liquidity profile of the equity; it does not by itself improve earnings, reduce debt, or demonstrate that retained capital will earn attractive returns.