V-Guard Industries gains as board approves stock split

The stock rallied 11% to Rs 1,470, also its record high on the NSE in early morning trade.

V-Guard Industries has rallied 11% to Rs 1,470, also its record high on the National Stock Exchange (NSE) in early morning trade after the company announced that its board approved the proposal for splitting of equity shares in the ration of 1:10.

“At its meeting held on June 16, 2016, the board has approved the sub division of the equity shares of the company from Rs 10 to Rs 1 per equity share, to improve liquidity of the shares in the market and make the shares more affordable to small investors,” V-Guard Industries said in a statement.

Stock splits are usually carried out to make the company’s stocks more affordable to retail shareholders, thereby widening the shareholder base, which in turn boosts the liquidity for these stocks.

They are usually announced when a company’s stock price reaches a certain price level, which makes it expensive for smaller shareholders to buy them. The move does not change anything fundamentally for the stock.

In past three-months, the stock has outperformed the market by surging 75% from Rs 836 on March 17, as compared to 7% rise in the Nifty 50 index.

At 09:30 AM, the stock was up 8% at Rs 1,426 on the NSE. The trading volumes on the counter jumped more than three-fold with a combined 87,603 shares changed hands on the BSE and NSE so far.