Splitting of shares
This query is : Resolved
satya prasad
(Querist)
19 August 2014
what happens to market value of share after splitting of share? please provide reasons
CA Kishore Tallam
(Expert)
27 August 2014
The market value per share will also be split as per the ratio of share split.
Explained below:
Assume the market value of a company is 1 crore and number of shares (FV Rs. 10) are 100,000. MV per share is Rs. 100.
Now the shares are split into 1,000,000 shares of FV Re. 1 each.
Since the total value of the company is still 1 crore, MV per share is 1 crore / 10 lac shares i.e. Rs. 10 per share.
This is generally done for easy marketability of stocks.
Explained below:
Assume the market value of a company is 1 crore and number of shares (FV Rs. 10) are 100,000. MV per share is Rs. 100.
Now the shares are split into 1,000,000 shares of FV Re. 1 each.
Since the total value of the company is still 1 crore, MV per share is 1 crore / 10 lac shares i.e. Rs. 10 per share.
This is generally done for easy marketability of stocks.
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