Britannia approves 1:2 share split to enhance stock affordability and liquidity

ASIA – Britannia Industries’ board has approved share split in the ratio 1:2 to make stock more affordable for the small retail investors and increase liquidity.

According to ET Retail, the division which awaits approval of the members and authorities will see authorization of 250m shares worth US$7.14mn in share capital besides 120.1m equity shares valued at $0.029 each.

“There had been a significant rise in the market price of the equity shares of the Company over a period of last one year,” said the company in a regulatory filing.

“In order to improve the liquidity of the Company’s Equity Shares in the Stock Markets and to make them more affordable for the small retail investors, it is proposed to sub-divide Equity Shares of face value of US$0.029 each into 2 Equity Shares of the face value of $0.014 each.”

The company expects it to complete within 3-4 months from the date of Board approval.

Lower face value

Stock-split is dividing of a share into stocks of lower face value, something that leads to a fall in stock price of the company but the total market capitalisation of the stock post-split remains the same.

However, total value of shareholding on the day of split remains unchanged even as the number of shares in the company grows, enabling many new investors to buy the stock since it has become more affordable for shareholders after a stock split.

For the quarter ended June 2018, the confectionery major reported a 19.41% rise in consolidated net profit at US$36.89 million for the quarter ended June 30, 2018, driven by double-digit volume growth.

The company had posted a net profit of US$30.89mn in the April-June period a year ago while its total income stood at US$369.57 million in the quarter under review.

The company said the reported revenue, part of total income, for the quarter ended June 30, 2018, is not comparable to the revenue reported in the previous period due to implementation of GST with effect from July 1, 2017.

“Excise duty has subsumed into GST, and hence revenue from sale of goods for the period commencing July 1, 2017 does not include excise duty,” said the company in a statement.

Strong growth is fuelled by distribution expansion also given that US$4.57bn biscuit market in India is projected to grow at a compounded annual growth rate of 11.3% in value terms during 2018-2022 (according to Business Today).

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