1:10 Stock Split: Deepak Builders & Engineers India’s board on Tuesday approved a 1:10 stock split and also cleared an increase in authorised share capital from Rs 55 crore to Rs 65 crore.
The decision was taken in a board meeting held on April 28.
1:10 stock split approved
The board approved the sub-division of one existing equity share with a face value of Rs 10 into 10 equity shares with a face value of Re 1 each.
This means shareholders holding one share of Rs 10 will receive 10 shares of Re 1 each after the split.
The company said the move is aimed at improving liquidity in the stock and making shares more affordable and accessible for a wider base of investors, especially retail investors.
However, the stock split is subject to shareholder approval through a postal ballot.
In an exchange filing, the company noted “Sub-division/ split of 1 (One) existing equity share of the Company having face value of Rs. 10/~ (Rupees Ten only) each, fully paid-up, into 10 (Ten) equity shares of the Company having face value of Re. 1/- (Rupee One only) each, fully paid-up, subject to the approval of the shareholders by Postal Ballot.”
What is stock split
A stock split means a company divides one share into multiple smaller shares so that the price of each share becomes lower, but the total value of your investment stays the same. For example, in a 1:10 stock split, if you own 1 share worth Rs 1,000, it will become 10 shares worth around Rs 100 each. You do not gain extra money immediately, only the number of shares increases and the price per share decreases. Companies usually do this to make the stock look more affordable and attract more small investors.
Authorised capital increased
Along with the stock split, the board also approved an increase in authorised share capital from Rs 55 crore to Rs 65 crore.
The company said this would require an alteration in the capital clause of its Memorandum of Association.
The higher authorised capital will give the company more flexibility to issue additional shares in the future and support capital raising as well as expansion plans.
This proposal will also require shareholder approval.
The company in an exchange filing said “Increase in the Authorised Share Capital of the Company from Rs.55,00,00,000 (Rupees Fifty-Five crores only), divided into 55,00,00,000 (Fifty-Five crore) equity shares of Re. 1.00/- (Rupee One Only) each (post-split) to Rs. 65,00,00,000/- (Rupees Sixty-Five Crores Only), divided into 65,00,00,000 (Sixty-Five Crore) equity shares of Re. 1.00/- (Rupee One Only) each, and consequent alteration of the Capital Clause of the Memorandum of Association of the Company, subject to the approval of the shareholders by Postal Ballot.”
What happens next
Deepak Builders will issue a postal ballot notice to seek approval from shareholders for both proposals — the equity share split and the increase in authorised share capital.
Once approved, the company will implement the changes in line with regulatory requirements.
Share price performance
Deepak Builders & Engineers India shares closed at Rs 86.00 on the NSE on April 29, up 3.19 per cent from the previous close.
