Can anyone tell why sub division is made and what its impact on share capital & prices of shares ???????????
6 Replies
Vikash Kumar
(Manager Accounts (CA. Final))
(694 Points)
Replied 30 June 2011
To increase the interest of samll investor & daily trading volume of share.
Vikash Kumar
(Manager Accounts (CA. Final))
(694 Points)
Replied 30 June 2011
Example: Currently market price of 1 of share of OMDC (Orissa Minerals, FV-Rs.10) is Rs.60,000/-, we need Rs.60,000/- to buy one share of OMDC. if it split share of fv of rs.10 to fv of rs.1 each than we need Rs.6,000/- (Rs.60000/10) to buy one share, which a small investor can afford.
Vikash Kumar
(Manager Accounts (CA. Final))
(694 Points)
Replied 30 June 2011
HDFC bank is going to split its share from fv of Rs.10 to Rs.2 each. Current Market price is Rs.2500/- each. On record date one share will converted into FV of Rs.2 each and Market price will 1/5 of record date.
Nidhi Jain
(CS )
(987 Points)
Replied 01 July 2011
Thanks Vikash.
It means after splitting mkt price also divide into proportion of splitting.
Vikash Kumar
(Manager Accounts (CA. Final))
(694 Points)
Replied 01 July 2011
Yes, after splitting mkt price of share also divide into proportion of splitting.
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