Unless of course they plan for bonus
Obviously after the proposed split of present face value 2 there can never be another split . i am not using the words like from present face value 2 to 1 because it can only be splitted in face value 1 as splitting in paisa too not allowed.
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BONUS is all together a different thing with face value remain same, reserves reduced and increases the burden of serviceable equity for company .
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I mean what if promoters wants to decrease share price to make it affordable to retail if the FV is Already 1, in such case bonus can be only option
well @sabkaview i am mainly concerned about the stock,
after split the stock may fall down or will it be good for stock,
whats the main reason and why companies split their stock even though there is no change in market capitalization. and no use for the company.even after the stock split.
As i said it is prerogative of management to split the face value or issue bonus shares . well i do not agree with the view that management should consider bonus to make it affordable for small investor that too in this era where Marketable lot is 1 share .
split is an option because it neither increases the equity nor reduces the reserves and remain in continues trade not like bonus where it needs listing approval . Frankly speaking i do not understand any worthwhile reason why companies like Trident at market price of rs 65 per share need face value split .
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thanks @sabkaview
if company gives bonus then their market capitalization will change ah.
what u think about hdfc bank split 1:2
Neither bonus nor stock split changes M-Cap, it always remains same
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well @dheeraj Actually i just want to know how companies move from small capital to medium capital or large capitalization, or vice versa
@VigeVet As you are aware Market Cap= Share price * Number of shares
Larger cap comprises of 85% of total Indian stock market, Mid-caps the next 15% and the last 5% with smallest MCap forms the small cap (not sure on theses ratios but you get the point)
Suppose there is a mid-cap company with 100 crores shares outstanding having share price 100. Now due to exceptional performance in earnings the share price rises to 1000 within some years making it a multibagger.
Now initially when it was in the mid cap the firm used to be in the mid 15%. now that the share price increased thereby increasing Mcap, the firm moved to the 85 % section comprising of companies with highest mcaps making it a large cap.
I never heard if there is any threshold number to distinguish the 3 section, but hope you understood the point.
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yes, thank u, then if there is split and bonus shares given by the company,
then company share increases,
ie) if 1:2 bonus or split, at share price 10 and company have 10 shares, after split it turns to 5 each and company have 20 shares at 5 Rs, then if the share price from 5 moves to 8 Rs, and company having 20 shares at 8 Rs,
before it was 100 Rs total and now it is 160 Rs in total, it means company capitalization increases from 100 Rs to 160 Rs.
am i right.
Exactly
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okay thank u,
@sabkaview and @dheeraj
then i think stock split and bonus is good for investors know…
but i also heard that, after stock split or bonus, the market price gradually decreases due to increase in liquidity of shares.
so i am confused a lot about it in this explanations.
Nothing particularly good or bad for investors. Also there is no such trend price increase or decrease after spit or bonus, trading continue as usual along with consideration for earning performance
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i am not a big fan of bonus or even split but long term capital appreciation .companies like Mrf ,Shree cement , page industries or for that matter Bosch (recently had a buyback ) rarely give bonus and even dividend distribution policy is very conservative but surely such shares have given huge very huge long term capital appreciation.
3M INDIA since public issue at rs 10 in year 1990 NEVER EVER GAVE DIVIDEND , no bonus , no rights ,no buyback but just look at the capital appreciation it has given !
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Not related to this topic hence i am creating a new topic UNUSUAL FACE VALUE SPLIT
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