Heritage Foods Private Ltd has announced a stock split earlier on 10-August-2017, now fixed the record date as 11-Oct-2017 and the ex-date for the split is 10-Oct-2017.
The board members approved 1:2 stock split in which a share of face value Rs. 10 will be subdivided into two shares of Rs. 5 each. In the board meeting, the proposal for 50:50 joint venture with Novandie SNC, a france company has also been approved and the operations are planned to begin from 2018.
Why stock split are announced by the companies?
Stock split is announced when the stock price have move higher. To bring it more affordable for the small investors, companies announces stock split. By this, stock price gets decreased and the number of shares gets increased.
Usually stock split won’t have any impact on the value of the securities. It is used by the issuer to increase the liquidity in trading. Whoever brought the securities irrespective of the date of purchase, their positions will undergo change after the settlement of stock split.
In this case, if you hold 1000 shares of Heritage Foods on the record date, your position will be doubled, results in 2000 after the stock split settlement and will be updated in your demat account. Consequently, the price will face a sharp fall by half of the scrip price before split. For example if the price of Heritage Foods before split is Rs. 1,400, due to the 1:2 split the price will become Rs. 700 after the split. So, the net value of the holdings after the split is same as before the split.
Quarterly results of Heritage Foods Pvt Ltd
For the quarter ended 30 June 2017, Heritage Foods reported a net profit of Rs. 7.64 Crores which is 48.02% less than the profit of previous quarter ended on 31-Mar-2017 amounts to Rs. 14. 70 Crores.
As of 03-Oct-2017, price of Heritage foods increased 15.11% comparing to the date of announcement. On 10-Aug-2017, scrip was traded at Rs. 1,236.75 and as of 03-Oct-2017, scrip was traded at 1,423.60.