The share price of Kotak Mahindra Bank appeared sharply lower in today’s trade. This might have left many investors puzzled. At the first glance, the share seemed to have lost nearly 80% intra-day. However, investors must note that this is more of a technical adjustment after the bank’s 1:5 stock split.
Let’s take a look at the key reason why the share price of the company plunged so sharply –
Kotak Mahindra Bank stock split: Why the share price looks sharply lower today
Kotak Mahindra Bank started today’s (January 14) trading session after adjusting for its 1:5 stock split. Under this split, one equity share with a face value of Rs 5 has been divided into five shares of Rs 1 each. As a result, the share price automatically adjusted lower in proportion to the split ratio.
This adjustment makes the stock look cheaper on the screen, even though the overall value of an investor’s holding remains unchanged. In simple terms, the number of shares has increased, while the price per share has reduced accordingly.
Kotak Mahindra Bank stock split: Who is eligible for the stock split
The record date for the stock split was January 14. This means investors who held Kotak Mahindra Bank shares in their demat accounts as of Tuesday’s market close are eligible for the split benefits.
Those buying the stock on January 14 or later are purchasing shares after the price adjustment.
Kotak Mahindra Bank stock split: Second stock split in 15 years
This is not new territory for Kotak Mahindra Bank. The lender had earlier carried out a stock split in 2010, when it split one Rs 10 share into two Rs 5 shares. Furthermore, later, in 2015, the bank also issued bonus shares in a 1:1 ratio, increasing shareholder holdings without changing their investment value.
Kotak Mahindra Bank stock split: What investors are watching next
Beyond the stock split, attention is now shifting to Kotak Mahindra Bank’s upcoming financial results. The bank is scheduled to announce its third-quarter earnings on January 24.
Alongside the results, the board is also expected to consider a proposal to raise funds through non-convertible debentures.