BRITANNIA goes Ex-Split on November 29, 2018. Here's how it impacts your equity holdings and F&O positions


#1

As per SEBI guidelines for adjustments to F&O contracts in case of announcement of corporate actions (Methodology explained here on NSE website) :

Britannia Industries Limited has informed the Exchange that board of directors of the company has
fixed Record Date as November 30, 2018 for sub-division of the one (1) equity share of face value of
Rs.2/- (Rupees Two) each fully paid into 2 (Two) equity shares of face value of Rs.1/- (Rupees One)
each fully paid.

Symbol : BRITANNIA
Stock split ratio : 2:1
Ex-date : November 29, 2018

Effect on Holdings -

When a stock split happens, the share price drops based on the adjustment factor. Adjustment factor for Stock split of A: B is defined as (A/B). In the case of BRITANNIA, the adjustment factor is (2/1) = 2, since the split ratio is 2:1.

So, if you held BRITANNIA at an average price of 5900, the price of each share after split adjustment will be 2950.

Adjustments for Option Contracts -

  1. Strike Price: The adjusted strike price shall be arrived at by dividing the old strike price by the
    adjustment factor.
  2. Market Lot: The adjusted market lot shall be arrived at by multiplying the old market lot by the
    adjustment factor. The revised market lot would be 200.

Ex: BRITANNIA 29-NOV-2018 5900.00 CE lot size of 100 after adjustment will be BRITANNIA 29-NOV-2018 2950.00 CE lot size 200.

Adjustments for Future contracts -

  1. Futures price: The adjusted futures price shall be arrived at by dividing the old futures price by the adjustment factor.
  2. Market Lot: The adjusted market lot shall be arrived at by multiplying the old market lot by the adjustment factor. The revised market lot would be 200.

Ex: BRITANNIA 29-NOV-2018 5958.35 lot size 100 after adjustment will be BRITANNIA 29-NOV-2018 2979.20 lot size 200.

Note: The above changes are effective from 29th November, 2018. Refer to this circular from NSE for more info on this. To know more about the impact of corporate actions on stock prices, check this chapter on Varsity.