Multibagger stock hits upper circuit ahead of record date for stock split

“we wish to inform you that the company has fixed Tuesday, 22nd February, 2022 as the “Record date” for determining eligibility of members for the purpose of sub-division of the equity shares of the company from face value of Rs. 5/- each fully paid-up to face value of Rs. 2/- each fully paid-up,” the company had said in an exchange filing.

Upon sub-division of face of value of each share from ₹5/- to ₹2/-, all fractions resulting from the sub-division of equity shares shall be consolidated into whole equity shares and the same will be disposed of at the market price and the net proceeds (less expenses, if any) will be distributed proportionately, as far as practicable, to the members concerned, JBM Auto said.

In December 2021, the company had informed that its board approved the proposal of sub-division of equity share or stock split of every equity share having face value of ₹5 into equity shares having face value of ₹2 each.

A stock split increases the number of shares that are outstanding by issuing more shares to the current shareholders. Stock split decreases the market price of the individual shares, however, does not result in changing the market capitalization of the company.

A company engages in stock-split decision to make its stock more affordable if its price levels are very high, which in thus would lead to increase in liquidity in the stock.