Stock Splits

45 companies splitting stock and FY17 has just begun
The Financial year 2017 has just crossed a quarter and

45 companies have already announced the stock-split
for the year. Stock splits generally happen in a bull
market as many promoters also want to keep hold of
the wealth created by the secondary market. Giving
out bonuses and splits is just an additional way of
creating wealth in the hands of the shareholders.
What is a Stock Split?

All the Public-traded companies have a fixed number of shares that are held or traded in the
share market. The stock split increases the number of those shares in the market. The price of
each share is adjusted so that the market capitalization of the company remains the same and
dilution doesnt occur.
Why the Split?

The split is usually done by the company whose share price has increased to a level that is
either too high or is beyond the levels of the companies in the same sector. The main motive
of the split is to make the shares more affordable to small investors, keeping the underlying
value of the company unchanged.
The Investment Strategy:

The split makes the stock affordable to even the small investors hence they rush to buy the
stock, boosting the demand and driving up the price. Hence, it is often seen that the stock
prices rise almost right after they have gone down due to the splits. Also, the split indicates
that the price of the stock have been rising drastically and will continue to do so in the future
as well, pushing the demand and price in turn.
But one should not ignore the fundamentals of the company in the process of blindly
following the buy pattern. They must keep an eye on the proportionate growth in the bottom
line of the company before investing their hard-earned money in such stocks.
Stock-Splits this financial year:

Karur Vysya Bank: The Bank, yesterday, has sought shareholders approval for the
stock split of five for one. This means that each share of the Bank will be split in to
five. This split will bring the Karur Vysya Bank share price down which is currently at
the face value of Rs. 10. Though the shareholders are yet to nod over the proposal, the
stock has started gaining little by little over NSE.
KNR Constructions: On 26th of September, KNR Constructions share price traded on
a new 52-weeks high after the company declared that the Board meeting will be held
on 30th of the month for considering the stock-split in the ratio of 1:5. This means that
each share of Rs. 10 will be split in to the five shares of Rs. 2 each.
8K Miles: 8K Miles share price went up by 4% on 27th on the company announced
that it has fixed 13th October 2016 as the date for ascertaining the eligibility of
shareholders entitled for the stock split and bonus issue. The announcement was made
on 26th September after the market hours. On 24th August, the companys board
approved the stock split in the ratio of 1:2 with one bonus share on every three shares
held.
Trent: On September 12th, Trent split its one share of face value Rs. 10 in to ten shares
of face value of Re. 1. The stock had surged around 10% on the day of the split. The
split was approved on June 28th 2016.
V Guard: Right ahead of its stock split, V Guard share price hit a record high. On 31st
August 2016, the company divided its one equity share of Rs 10 in to ten shares of re.
1 each.
Maruti Suzuki: Maruti share price has seen a jump of nearly fivefold in past four
years. The company is considering the stock split requested by the shareholders as the
stock has become inaccessible to many because of the price hike. In past three years,
Maruti has appreciated to a magnificent 302%, surpassing both the Nifty and the
Sensex.
Bajaj Finance: On 26th July, the board of Bajaj Finance approved the stock split of
one equity share of face value of Rs. 10 in to the five shares of face value Rs. 2 each.
The company also declared a bonus of one share for every share held of face value Rs.
2. Bajaj Finance share price zoomed over 12% on the trade same day. The company
completed its split on 12th September.
JMT Auto: JMT Auto share price gained after the company announced 22nd
September as the date for the split. The company split its share in two for one ratio.
Other than these big names, KPR Mills announced its stock split and went trading at a new
high. Capri Global share price rallied 16% on the announcement of the split. And these are
just a few names from the long list of 45 companies that have planned of indulging into the
stock split this financial year.
Disclaimer
The investment advice or guidance provided by way of recommendations, reports or other ways are solely the personal views of the
research team. Users are advised to use the data for the purpose of information and rely on their own judgment while making
investment decision.
Dynamic Equities Pvt. Ltd - SEBI Investment Advisory Reg. No.: INA300002022
Disclosure
Dynamic Equities Pvt. Ltd. is a member of NSE, BSE, MCX SX and a DP with NSDL & CDSL. It is also engaged in Investment Advisory
Services and Portfolio Management Services. Dynamic Commodities Pvt. Ltd., associate company, is a member of MCX & NCDEX. We
declare that our activities were neither suspended nor we have defaulted with any stock exchange authority with whom we are
registered. SEBI, Exchanges and Depositories have conducted the routine inspection and based on their observations have issued advise
letters or levied minor penalty on for certain operational deviations.
Answers to the Best of our knowledge and belief of Dynamic/ its Associates/ Research Analyst: DYNAMIC/its Associates/ Research
Analyst/ his Relative:
Do not have any financial interest / any actual/beneficial ownership in the subject company.
Do not have any other material conflict of interest at the time of publication of the research report
Have not received any compensation from the subject company in the past twelve months
Have not managed or co-managed public offering of securities for the subject company.
Have not received any compensation for brokerage services or any products / services or any compensation or other benefits
from the subject company, nor engaged in market making activity for the subject company
Have not served as an officer, director or employee of the subject company
Article Written by
Tanaya Nath

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45 companies splitting stock and FY17 has just begun

The Financial year 2017 has just crossed a quarter and

What is a Stock Split?

Why the Split?

The Investment Strategy:

Stock-Splits this financial year:

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