A stock split is a corporate action where a company's existing shares are split into multiple shares, thereby reducing the par value of each stock. For example, if a company declares a 10:1 stock split, the par value of its stock is decreased from Rs 10 to Rs 1.
When a company declares a stock split, the total value of all the shares remains the same. However, the number of outstanding shares increases. This results in a lower price per share.
For instance, Company X has 1 lakh outstanding shares, and its stock is trading at Rs 100 per share. The total market capitalisation of the company is, therefore, Rs 1 crore (1 lakh shares x Rs 100 per share). If the company decides to do a 2-for-1 stock split, each shareholder will receive two shares for every share they own. So if an investor had 100 shares before the split, they would own 200 shares after the split. However, the total value of the investor's shares would remain the same. In this case, the investor had Rs 10,000 (100 shares x Rs 100 per share) before the split and (200 shares x Rs 50 per share) after the split). After the split, the total number of outstanding shares of company X would increase from 1 lakh to 2 lahks, but the total market capitalisation of the company would remain the same at Rs 1 crore.
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Here are some upcoming stock splits in June 2023 that investors can consider adding to their portfolios:
Radhagobind Commercial Limited is an Indian company dealing in the trade of textile goods and ancillary activities. It was incorporated on May 21, 1981, and is headquartered in Kolkata, India. The company deals in fabrication materials like embroidery, fancy sarees, H.L. fabrics, textile dress materials, etc.
Radhagobind Commercial Limited has a market cap of Rs 3.87 crore as of May 12, 2023. The company has announced a stock split to be implemented on Jun 7, 2023. The old face value of its stock is Rs 10, and the new face value post the split will be Rs 1.
Garv Industries Limited is engaged in the business of trading and distributing aluminium and textile products. The company is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange of India (NSE). Garv Industries Limited provides a range of products like aluminium products, including aluminium sheets, coils, extrusions, grills, ladders, and rolled products. It also deals in textiles, such as cotton fabrics, in B2B (business-to-business) and B2C (business-to-consumer) segments.
Garv Industries Limited has a market cap of Rs 9,103.29 crore. The company has announced a stock split to be implemented on Jun 2, 2023. The old face value of its stock is Rs 10, and the new face value post the split will be Rs 1.
Hardwyn is a leading architectural hardware and glass fittings manufacturer in India. Founded in 1965, it has been offering solutions for residential and commercial structures for over five decades. The company has several certifications like the BIS Mark from the Bureau of Indian Standards, ISO 9000-2000, ISO 9001-2008, and more.
Hardwyn has a market cap of Rs 533 crore as of May 12, 2023. The company has announced a stock split to be implemented on Jun 5, 2023. The old face value of its stock is Rs 10, and the new face value post the split will be Rs 1.
Stock splits help companies increase liquidity and make their shares more affordable to retail investors. While stock splits do not fundamentally change a company's value, they can lead to an increased interest from investors, leading to more investments and potentially higher stock prices. Typically, stock splits can benefit both the company and its investors. However, in order to benefit from them, it is essential for investors to follow corporate announcements and stay up to date with the latest news on the companies of their interest.
When investing in split stocks, it is vital to have a Demat and trading account. Motilal Oswal offers a free Demat account. Open a free account today and enjoy seamless investing in the upcoming stock splits in June!