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Shares of Hindustan Foods soared nearly 15 per cent to Rs 568 on the BSE in Friday’s trade, zooming as much as 37 per cent in the last two trading sessions, after the stock turned ex-date for stock split from face value of Rs 10 to Rs 2 each on Thursday.
The stock of diversified company traded at its 52-week high level. In past one month, the stock has gained 63 per cent as compared to 7.7 per cent rise in the S&P BSE Sensex.
Hindustan Foods had fixed July 22, 2022 as the record date for the purpose of sub-division of every 1 equity share of the face value of Rs 10 each into 5 equity shares of the face value of Rs 2 each.
The company said rationale behind the split was to encourage wider participation of retail investors by making the equity shares more affordable for them and to enhance the liquidity of equity shares of the company in the stock markets.
A stock split is a corporate action, where a company splits its shares into multiple new ones. Split shares neither add any new value, nor dilute the ownership stake of the shareholders. However, what they do is increase the number of shares of the company.
The main stock split benefits is that the shares of a company generally see increased liquidity. Since shares have now become more accessible to retail investors, more people would show increased demand for it, which can increase liquidity in the counter. Buying and selling shares will be far easier after a stock split.
Hindustan Foods is primarily engaged in the business of contract manufacturing of fast moving consumer goods (FMCG) products comprising primarily of home care, personal care, foods & refreshments, packing of tea and job working of shoes.
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