The announcement was that the shares of Cochin Shipyard will be split in the ratio of 2:1. According to this, one Cochin Shipyard share of Rs 10 face value will be converted into two new shares of Rs 5 face value. Proportionately the market price of Cochin Shipyard share will also fall from the date of ex-split. Cochin Shipyard stock closed at Rs 1,338, a gain of over three percent in Tuesday’s trade.
What is the advantage?
Stock split is the act of reducing the face value of a share by a certain ratio. Stock splits are done by companies to increase liquidity (to facilitate transfer) on the stock exchange and to attract more retail investors by lowering the market price of the stock. If the demand is created in the market when the price of the stock falls then the price of the stock will gradually rise again.
Cochin Shipyard is a multibagger stock that has more than doubled to investors in the last one-year period. A 166 percent increase was recorded in the stock. The low of the stock was Rs 410 and the high was Rs 1,408 during the one year period. It has gained about 30 percent in the last three months. Cochin Shipyard shares are currently trading near one-year highs.
September quarter results
During the July – September (second quarter) quarter of the current financial year, Kochi Shipyard has shown good year-on-year growth in revenue and net profit. In the September quarter, the company’s revenue grew to Rs 1,012 crore and net profit to Rs 182 crore. More construction/repair contracts have also been bagged by Cochin Shipyard recently.
(Disclaimer: The above mentioned information is shared for educational purpose. This is not an investment recommendation. Stock investment is subject to the risk of profit and loss in the market. Before taking any investment decision, you can seek guidance from SEBI approved analysts.)