Leading housing finance company HDFC on Monday announced it would split each of its share into five of Rs 2 each, in order to help wider retail investor participation in the company.
This is first share split by the finance firm in over a decade. The last share split of HDFC's share happened in 1999 when one share with face value of Rs 100 was divided in to 10.
"The board approved a proposal to sub-divide the face value of the equity shares of the Corporation from Rs 10 per share to Rs 2 per share," HDFC vice-chairman and CEO Keki Mistry said after announcing results for 2009-10.
Currently, HDFC has 28.71 crore shares, which would go up to 143.55 crore after the split.
The shares of HDFC closed at Rs 2,805.60, down 0.58 per cent in generally weak trade on the Bombay Stock Exchange.
HDFC's main rivals ICICI Bank and SBI have shares with face value of Rs 10 each.
Mistry said the share split will increase retail participation in the equity shares of HDFC.
"Foreign institutional investors are very large holders of equity in HDFC. We would like to have more retail participation. The stock split will enable retail participation," Mistry said.
Currently, FIIs hold about 75 per cent stake in HDFC, while retail participation is a little over 10 per cent.
The share split decision was taken after considering the requests received from several individual shareholders, he said, adding that the proposal is subject to the approval of shareholders in its annual general meeting to be held on July 14, 2010.
Post division of stock, the share price of HDFC will become more affordable for the retail investors as the market value would also adjust according to proposed split ratio, said an analyst.
