Introduction:
Investing in the stock markets requires a basic understanding of various financial terms and market mechanisms. One such phenomenon that often catches the attention of investors is a ‘stock split’. Understanding the meaning of stock split and its implications on the specific share value and the overall market sentiments can help you make smart investing decisions.
In this article, you will learn what a stock split is, its significance on the share value, and the upcoming stock splits in March 2024 in India. Continue reading.
What is a stock split?
A stock split is a corporate action wherein a company divides its existing shares into multiple shares. The primary goal is to increase the number of outstanding shares in the market while reducing the price (face value) per share. For example, in a 2-for-1 stock split, shareholders receive two shares against every share they previously held, effectively cutting the stock price in half.
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The impact of stock split
Stock splits do not impact a company's market capitalisation or the overall value of an investor's holdings. The proportionate increase in the number of shares is met with a proportionate decrease in the stock price. It ensures that the company's total market capitalisation remains the same even after the stock split.
Companies typically implement stock splits to make their shares more affordable for retail investors, increase liquidity, and potentially attract larger investors. A stock split is often viewed as a positive sign by the market, suggesting that the company's management is confident about its future growth prospects.
Upcoming stock splits in March 2024 in India
As of 28 February 2024, three companies have announced stock splits for March 2024. Investing in these companies before the record date allows you to capitalise on the potential long-term growth opportunity.
1. Tiger Logistics Limited
Tiger Logistics (India) Limited delivers third-party logistics solutions to corporate and multinational firms, both within India and globally. The company specialises in various services, including ocean and air freight forwarding, project cargo handling, customs clearance, warehousing, transportation, and supply chain management. Its clientele spans diverse industries, including automotive and engineering, aviation, agri and perishable products cargo, consumer durables and retail, and chemicals and hazardous materials.
On 17 February 2024, the company’s Board of Directors announced a 10-for-1 stock split in March 2024. As per the announcement, each equity share with a face value of Rs. 10 is proposed to be split into ten equity shares, each with a face value of Re. 1. The company has set the record date for this corporate action as 4 March 2024.
2. Capri Global Capital Limited
Capri Global Capital Limited (CGCL) is a Non-Banking Financial Company (NBFC) listed on the National Stock Exchange (NSE) as well as the Bombay Stock Exchange (BSE). It offers a range of financial services, including construction finance loans, housing loans, gold loans, and MSME (micro, small, and medium-sized enterprises) loans. The company also offers financial advisory and investment banking services.
On 23 February 2024, the company’s Board of Directors proposed a 2-for-2 stock split. As per the proposal, the company’s stocks will be split in half, reducing their face value from Rs. 2 to Re. 1. The record date for this corporate action has been fixed as 5 March 2024.
3. Manorama Industries Limited
Manorama Industries Limited is a Mumbai-based company engaged in the business of manufacturing, processing, and supply of specialty fats and oils, such as Sal Butter, Sal Fat, Sal Stearine, Mango Butter, Mango Oil, Kokum Butter, Kokum Oil, etc. The company’s clients primarily belong to the chocolate and cosmetic industries. The company’s products are exported to countries like Japan, Sweden, Germany, Malaysia, Italy, Singapore, Indonesia, and Denmark, among others.
At an annual meeting, the company’s Board of Directors announced a 5-for-1 stock split, proposing a reduction in the face value of its shares from Rs. 10 to Rs. 2 per share. The company has set the record date for this corporate action as 8 March 2024.
To conclude
Stock splits are strategic moves by companies to enhance shareholder value and market participation. Understanding the implications of a stock split can help you make informed investment decisions. You can consult financial advisors for professional guidance.
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