STOCK SPLIT

Sanam Kothari

STOCK SPLIT

A stock split is a decision to increase the number of shares that are outstanding by issuing more shares to current shareholders.

Decision made by the company's board of directors The most common stock split is two-for-one, in which
each share that a shareholder holds becomes two shares

Different types of stock splits

Forward stock splits :

The price of the stock will decrease; however, the

number of shares will increase proportionately. Advantages of Forward Stock Splits :

Increase liquidity of the stock This tactic is employed by many companies when their
stock sales come to a standstill

Different types of stock splits

Reverse stock splits : Stock split under which a firms number of shares outstanding is reduced Run the risk of being delisted, or even being removed from the market indexes. Advantages of Reverse Stock Splits : Liquidity and marketability of a companys stock might be improved

Why do companies splits their stocks?

Splitting the stock brings the share price down to a
more attractive level

Gives existing shareholders the feeling that they

suddenly have more shares than they did before

More affordable prices to the small investors

HDFC Bank announces stock split in 1:5 ratio

Bank's Executive Director, Paresh Sukhtanka :

"As share prices get higher in absolute terms, a retail

investor finds it too high...this (stock split) will make it more appealing to retail investors," -

The Coca-Cola Company Board of Directors Recommends Two-for-One Stock Split

Muhtar Kent, Chairman and CEO of The Coca-Cola Company :

long-term growth and better financial performance of

our Company