Splitting of shares

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satya prasad

satya prasad (Querist)
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19 August 2014 what happens to market value of share after splitting of share? please provide reasons

CA Kishore Tallam

CA Kishore Tallam (Expert)
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27 August 2014 The market value per share will also be split as per the ratio of share split.
Explained below:
Assume the market value of a company is 1 crore and number of shares (FV Rs. 10) are 100,000. MV per share is Rs. 100.
Now the shares are split into 1,000,000 shares of FV Re. 1 each.
Since the total value of the company is still 1 crore, MV per share is 1 crore / 10 lac shares i.e. Rs. 10 per share.
This is generally done for easy marketability of stocks.