SBI board approves stock split in 10:1 ratio
The bank said its board has decided to reduce the face value of equity shares from `10 to `1 a share and increase the number of issued shares accordingly
Mumbai: State Bank of India’s board on Wednesday approved a 10-for-1 stock split, the first by the country’s largest lender and the seventh bank this year to take the route to make their stock more affordable to smaller shareholders.
The bank said it will exchange 10 shares for each that is held and will also arrange to mirror the reduction in face value of the equity shares in its existing GDRs (global depository receipts).
Earlier this month, ICICI Bank had approved a five-for-one stock split, again the first by the second-largest lender in the country.
Axis Bank Ltd, Punjab National Bank Ltd, Canara Bank Ltd, Corporation Bank and Jammu & Kashmir Bank Ltd have also approved stock splits.
“The prices of banks have been rallying and they have been favourites of investors. Stock split is an attempt to make their shares affordable to retail investors, widen shareholder base, and thereby increase liquidity," said Asutosh Kumar Mishra, an analyst at Karvy Stock Broking Ltd. “It is just a trend. Since one bank started, others are following suit," added Mishra.
They are usually announced when a company’s stock price reaches a certain price level, which makes it expensive for smaller shareholders to buy them. The move does not change anything fundamentally for the stock.
So far this year, 75 companies have announced stock splits. A total of 79 companies had opted for a stock split in 2013.
Year to date, SBI shares have gained 41%, while the BSE Bankex Index climbed 38.5% in the same period. Benchmark 30-share S&P Sensex rose 26.3% so far this year.
Ahead of the announcement, SBI shares fell 2.68% to ₹ 2,487.40 on BSE on Wednesday, while the 30-share S&P BSE Sensex shed 0.12% to 26,744.69 points.
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