Indraprastha Gas Ltd. goes ex-split in the ratio 5:1 on 9 Nov 2017. How does this affect my equity holdings and F&O positions?
Hello,
Indraprastha Gas Ltd goes ex-split in the ratio 5:1 on 9 Nov 2017, i.e. each share held in Demat which is of face value Rs.10 is split into 5 shares of face value Rs.2 each.
Effect on Holdings:
When a stock is split, the share price reduces, in this case by a factor of 5. If you hold IGL shares at an average price of Rs.1500, the price of each share after the 5:1 split will be 1500/5 = Rs.300. Your share price gets divided by 5.
Please note that when a stock splits, it’s face value reduces. Here, the face value reduces from Rs.10 to Rs.2 and the number of shares increases by 5 times. But since the price of each stock also reduces by 5 times, your investment value remains the same.
P&L of holdings:
Your IGL holdings will show an artificial fall in P&L of about 80% on the ex-date of 9 Nov as well as on the record date of 10 Nov. The split shares will be credited to your Demat at the end of the Record date of 10 Nov and it will be visible in your Kite holdings from 13 Nov which is a Monday.(Since 11 Nov and 12 Nov are market holidays). A new ISIN will be activated for the split shares from the ex-date onwards.
You will receive an SMS from CDSL at the end of the Record date after your split shares are credited to your Demat.
Effect on F&O positions:
Option strike prices are divided by the factor of 5. The old strike price of 1540 becomes 308, strike price of 1550 becomes 310 and so on. The F&O lot size is multiplied by the factor of 5 where the old lot size of 550 will be revised to a new lot size of 2750.
The future and option prices are divided by the factor of 5 to maintain the same contract value as of before the split.
If you’re unable to see the revised market lot size on Kite Web, please do a hard refresh Ctrl+Shift+R to clear your Kite cache memory and you will be able to see the revised lot size and new strike prices. Steps to clear cache for Kite mobile.
This is the NSE Circular for F&O Adjustments in IGL
Read this Varsity article to know more about corporate actions and its impact on stock prices.