On Monday Eicher Motors shares effluxed by 10 percent after the scrip split its shares by 1:10 ratio which caused an increase in the capital base by 10 times its value and resulting in decrease of stock price by one-tenth of the last closing price.
Eicher Motors had first mentioned its stock split in May this year. In May the shares of Eicher Motors were significantly rising up, and they went up by 4 per cent at about Rs 15,589 on the BSE, thereafter the company announced its stock split plan to make the stocks more affordable to small retailers, investors and thus to increase liquidity. When a company splits its stocks the number of shares it owns increases but the market capitalization remains the same.
The final decision to go through with the stock split was announced on August 11. The stock split was in ratio 1:10 with that of the existing equity share of the face value of Rs 10 each into 10 equity shares of the face value of Re 1 each.
“Members of the company at its 38th Annual General Meeting on August 10 approved sub-division of each existing equity share of the face value of Rs 10 each into 10 equity shares of the face value of Re 1 each,” Eicher Motors said.