Companies split stocks when the prices reach so high that they become unaffordable to new investors. Stock split helps bring the stock price down and make them affordable.
Share price appreciation indicates a growing company or prospects of growth. Hence, a stock split is often considered a positive move. Before we discuss the list of upcoming stock splits in February 2023, let’s understand the impact of stock splits into companies and investors.
In simple words, it means breaking one stock into two or more. 2:1 and 3:1 are the most common split combinations. Stock splits increase the number of outstanding stocks in the market, and the company’s market capitalisation value remains unchanged. So, the intention is to make company stocks more affordable and improve liquidity.
The additional stocks are assigned to existing shareholders. It is interesting to note that a stock split doesn’t change your total holding percentage. The idea is that one may be more comfortable buying 100 shares for ₹10 than ten shares for ₹100. The total money value of the share remains the same.
Stock splits are neither good nor bad for existing investors. When a company splits stocks, it means that they are on a growth path which increases the share price in the market. The stocks you hold are growing in value. Existing shareholders can trade the extra shares for a profit.
But on the flip side, more shares will reduce the dividend per share.
After reading so far, you might ask whether it is a good or bad policy. The answer to your question is when the stock price rises, it usually indicates that the company is growing, indicated by more demand for their stocks. When a stock becomes expensive, it affects its liquidity. Companies often split shares to improve liquidity and onboard more investors.
Stock splitting doesn’t change the fundamentals of a company. Hence, right after the split, the share price may move downwards to adjust to the company’s market capitalisation. It is also non-dilutive and doesn’t impact your voting rights.
The companies below have announced stock splits this month. If you have been eyeing these company stocks for a long time, this is your chance to add them to your portfolio.
|February 15, 2023
|February 3, 2023
Shreeji Translogistics has split its shares for the first time. The new face value of the shares is ₹2 against ₹10. The shares will trade on an ex-split basis after February 15, 2023.
It is a surface logistics and parcel delivery company that engages in freight management, logistics solutions and warehousing services. Their shares have risen 100.09% in the last twelve months.
The company’s stocks have rallied 311% in the last six months.
Servotech Power stocks will be available on an ex-split basis after February 2023. The company has announced a 5:1 stock split for their shares.
Hope the article on upcoming stock splits helps you select the right stock options. However, stock splits shouldn’t be the only reason for you to buy shares. Stock splits don’t change a company’s fundamentals. So, you must always back your decisions with the correct research. If you are new to investing and don’t have a Demat account yet, open one with Angel One for free in under five minutes.
Disclaimer: This article is written for educational purposes only. The securities quoted are only examples and not recommendations.
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