Market Momentum 2024 An In Depth Look at Share Splits in the Indian Market

Market Momentum 2024: An In-Depth Look at Share Splits in the Indian Market

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A share split, also known as a stock split, is a corporate action where a company increases the number of its outstanding shares by splitting existing shares into multiple shares. In the Indian market, a share split is a common practice undertaken by companies for various reasons.

Share Split Breakdown: A Detailed Analysis of Recent Updates and Announcements

Issuer CompanyStock Split DateEx DateRevised Face ValueNSE SymbolBSE Security Code
Bodhi Tree Multimedia LtdApr 05, 2024Apr 05, 2024Rs 10/- to Rs 1/-BTML543767
CUPID LTDApr 04, 2024Apr 04, 2024Rs 10/- to Rs 1/-CUPID530843
PERSISTENT SYSTEMS LTDApr 01, 2024Mar 28, 2024Rs 10/- to Rs 5/-PERSISTENT533179
Dhatre Udyog LtdMar 29, 2024Mar 28, 2024Rs 10/- to Rs 1/-DHATRE540080
Lorenzini Apparels LtdMar 28, 2024Mar 28, 2024Rs 10/- to Rs 1/-LAL540952
UNITED VAN DER HORST LTDMar 26, 2024Mar 26, 2024Rs 10/- to Rs 5/-UVDRHOR522091
Refex Industries LimitedMar 22, 2024Mar 22, 2024Rs 10/- to Rs 2/-REFEX532884
Colab Cloud Platforms LtdMar 19, 2024Mar 19, 2024Rs 10/- to Rs 2/-COLABCLOUD542866
Tine Agro LtdMar 18, 2024Mar 18, 2024Rs 10/- to Rs 1/-TINEAGRO531205
Waaree Renewable Technologies LtdMar 16, 2024Mar 15, 2024Rs 10/- to Rs 2/-WAAREERTL534618
Colab Cloud Platforms LtdMar 13, 2024Mar 13, 2024Rs 10/- to Rs 2/-COLABCLOUD542866
OK PLAY INDIA LTDMar 11, 2024Mar 11, 2024Rs 10/- to Rs 1/-OKPLA526415
Sunshine Capital LtdMar 11, 2024Mar 11, 2024Rs 10/- to Rs 1/-SCL539574
Manorama Industries LtdMar 08, 2024Mar 07, 2024Rs 10/- to Rs 2/-MANORAMA541974
Sunshine Capital LtdMar 08, 2024Mar 07, 2024Rs 10/- to Rs 1/-SCL539574
Capri Global Capital LimitedMar 05, 2024Mar 05, 2024Rs 2/- to Rs 1/-CGCL531595
Tiger Logistics (India) LtdMar 04, 2024Mar 04, 2024Rs 10/- to Rs 1/-TIGERLOGS536264
Remedium Lifecare LtdFeb 23, 2024Feb 23, 2024Rs 5/- to Rs 1/-REMLIFE539561
SG Mart LtdFeb 22, 2024Feb 22, 2024Rs 10/- to Rs 1/-SGMART512329
Maagh Advertising and Marketing Services LtdFeb 05, 2024Feb 05, 2024Rs 10/- to Rs 1/-MAAGHADV543624
Growington Ventures India LtdJan 31, 2024Jan 31, 2024Rs 10/- to Rs 1/-GROWINGTON539222
DOLPHIN OFFSHORE ENTERPRISES (INDIA) LTDJan 25, 2024Jan 25, 2024Rs 10/- to Rs 1/-DOLPHIN522261
Trishakti Industries LtdJan 16, 2024Jan 16, 2024Rs 10/- to Rs 2/-TRISHAKT531279
Franklin Industries LtdJan 11, 2024Jan 11, 2024Rs 10/- to Rs 1/-FRANKLININD540190
Cochin Shipyard LtdJan 10, 2024Jan 01, 1753Rs 10/- to Rs 5/-COCHINSHIP540678
Cochin Shipyard LtdJan 10, 2024Jan 10, 2024Rs 10/- to Rs 5/-COCHINSHIP540678
NESTLE INDIA LTDJan 05, 2024Jan 01, 1753Rs 10/- to Rs 1/-NESTLEIND500790
NESTLE INDIA LTDJan 05, 2024Jan 05, 2024Rs 10/- to Rs 1/-NESTLEIND500790
Pearl Global Industries LimitedJan 05, 2024Jan 05, 2024Rs 10/- to Rs 5/-PGIL532808
INDIAN LINK CHAIN MANUFACTURES LTDJan 03, 2024Jan 03, 2024Rs 100/- to Rs 10/-INLCM504746

Please note that the information in this table is subject to change, and potential investors should conduct thorough research before making any investment decisions.

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Here’s an explanation of share splits in the Indian market:

Reasons for Share Splits:

  • Liquidity Improvement: One of the primary reasons for a share split is to enhance liquidity in the trading of shares. By increasing the number of outstanding shares, the trading volume can potentially increase, making it easier for investors to buy and sell shares.
  • Reducing Share Price: Companies may opt for a share split to reduce the market price per share, making the stock more affordable to a broader range of investors. This can attract more retail investors and improve the stock’s accessibility.
  • Market Perception: Share splits are sometimes viewed positively by investors as a signal of the company’s confidence in its future growth prospects. It can also enhance the company’s image and attractiveness to investors.

Types of Share Splits:

  • Forward Split (Stock Split): In a forward split, the company increases the number of shares outstanding, typically by a certain ratio such as 2:1, 3:1, or 5:1. For example, in a 2:1 split, each existing share is split into two shares.
  • Reverse Split: Conversely, a reverse split involves reducing the number of shares outstanding, typically to increase the share price. For example, in a 1:5 reverse split, every five existing shares are consolidated into one share.

Impact on Investors:

  • No Change in Value: A share split does not change the overall value of an investor’s holdings. For example, if an investor owns 100 shares of a company valued at ₹1,000 each before a 2:1 split, they would own 200 shares valued at ₹500 each after the split.
  • Increased Liquidity: Share splits often lead to increased liquidity in the stock as more shares are available for trading. This can result in a higher trading volume and potentially narrower bid-ask spreads.
  • Perceived Positive Signal: In many cases, investors perceive share splits as a positive signal indicating the company’s growth and confidence in its future performance. This can lead to increased investor interest and potentially drive up the stock price in the short term.

Tax Implications:

  • In India, share splits do not have direct tax implications for shareholders. The cost of acquisition for the split shares remains the same, and capital gains tax is calculated based on the original acquisition cost and the selling price of the shares.
  • However, investors should consult with tax advisors to understand any indirect tax implications that may arise from a share split, such as changes in tax calculations during the sale of split shares.

Regulatory Requirements:

  • Companies planning to undertake a share split must comply with regulatory requirements set forth by the Securities and Exchange Board of India (SEBI) and other relevant authorities. This includes obtaining approvals from shareholders and regulatory bodies and ensuring compliance with disclosure and reporting standards.

Overall, share splits are a common corporate action undertaken by companies in the Indian market to improve liquidity, enhance shareholder value, and signal growth prospects. By understanding the dynamics of share splits, investors can better navigate the stock market and make informed investment decisions.

Share Splits FAQs in the Indian Market

QuestionAnswer
What is a share split?A share split, also known as a stock split, is when a company divides its existing shares into multiple shares to increase the number of outstanding shares.
Why do companies implement share splits?Companies implement share splits to make their stock more affordable to investors, improve liquidity, and potentially attract more investors.
How does a share split affect the number of outstanding shares?A share split increases the number of outstanding shares, but the total market value of the company remains the same.
What is the difference between a forward and reverse share split?In a forward share split, existing shares are divided into multiple shares, while in a reverse share split, multiple shares are combined to form one share.
Are share splits common in the Indian market?Share splits are relatively common in the Indian market, especially among companies with high share prices.
How does a share split impact the price per share?A share split reduces the price per share proportionally to the split ratio. For example, in a 2-for-1 split, the price per share will be halved.
Can shareholders prevent a company from implementing a share split?Shareholders typically have no power to prevent a company from implementing a share split, as it is a decision made by the company’s management and board of directors.
Are there any regulatory requirements for companies conducting share splits?Companies must comply with regulations set by regulatory authorities such as SEBI when conducting share splits.
How often do companies typically announce share splits?Companies announce share splits periodically based on various factors such as the company’s growth and market conditions.
What are the benefits of a share split for investors?Share splits make stocks more affordable, increase liquidity, and potentially attract more investors, leading to broader ownership.
Can a share split indicate the company’s financial health?A share split alone may not necessarily indicate the company’s financial health, but it can be a sign of management’s confidence and growth prospects.
Do share splits affect a company’s earnings per share (EPS)?A share split does not affect a company’s earnings per share; however, it increases the number of outstanding shares, which may affect EPS calculations.
Can share splits affect dividend payments?Share splits do not directly affect dividend payments, as the total dividend payout remains the same, but the dividend per share decreases due to the increased number of shares.
How do share splits affect market capitalization?A share split does not affect a company’s market capitalization, as it only increases the number of outstanding shares while reducing the price per share proportionally.
Are there any tax implications for shareholders due to a share split?Shareholders typically do not incur any tax implications as a result of a share split, as it is a non-taxable event.
Are there different types of share splits?Yes, there are primarily two types: forward share splits (increasing the number of shares) and reverse share splits (decreasing the number of shares).
How does a share split affect shareholder equity?A share split does not impact shareholder equity, as it merely divides the existing equity into more shares, maintaining the overall value of the shareholders’ ownership.
Can companies use share splits to manipulate their stock price?Companies typically do not use share splits to manipulate stock prices, as it is a transparent and regulated process.
Do share splits change a company’s fundamentals?Share splits do not alter a company’s fundamentals, such as its revenue, earnings, or operations. They only affect the number of outstanding shares and the price per share.
Are there any disadvantages to share splits?Share splits may result in increased trading activity and volatility in the short term, but they generally do not have long-term disadvantages if the company’s fundamentals remain strong.
How do shareholders benefit from share splits?Shareholders benefit from share splits by potentially seeing an increase in the liquidity of their shares and a broader investor base, which could lead to enhanced stock performance.
Can a company conduct multiple share splits?Yes, a company can conduct multiple share splits over time as deemed necessary to adjust its stock price and make it more accessible to investors.
Do all shareholders receive additional shares in a split?Yes, all existing shareholders typically receive additional shares in proportion to their existing holdings during a share split.
Are there any market indicators that suggest a company may conduct a share split?A rapidly increasing stock price or a company’s desire to attract more retail investors are common indicators that a company may consider a share split.
Can investors trade fractional shares after a share split?In India, investors cannot trade fractional shares directly on exchanges. Fractional shares resulting from a share split are typically aggregated and sold by the company.
How do stock options and warrants get adjusted after a share split?Stock options and warrants are adjusted according to the terms specified in their agreements, which often include adjustments to the strike price and the number of shares covered.
Can share splits impact a company’s dividend policy?Share splits do not directly impact a company’s dividend policy, but companies may adjust dividend payouts based on their financial performance and capital allocation priorities.
Are there any restrictions on when a company can announce a share split?Companies generally have the flexibility to announce share splits at any time, subject to compliance with regulatory requirements and approval by the board of directors and shareholders.

Disclaimer: The information provided in this blog is for general informational purposes only and should not be considered as professional advice. We are not registered with the Securities and Exchange Board of India (SEBI), and our content should not be construed as financial recommendations or endorsements. Readers are encouraged to conduct their own research and, if needed, consult with a certified financial advisor before making any investment decisions. We do not assume responsibility for any actions taken based on the information presented in this blog. Thank you for your understanding.