Instead, it’s the result of a technical price adjustment as the stock traded ex-split following its recently announced 5:1 stock split.
As per the corporate action, Kotak Mahindra Bank has subdivided each Rs 5 share into five shares of face value Rs 1. The record date for determining eligible shareholders was set for today, January 14, and the stock also began trading ex-split.
This change effectively increases the number of outstanding shares in circulation by five times while reducing the face value per share. Accordingly, the share price gets adjusted downward to reflect the revised capital structure, without impacting the company’s market capitalisation or shareholder wealth.
To break it down: if a shareholder owned 50 shares before the split, they would now hold 250 shares post-split. If the share was priced at Rs 1,800 before the split, it would now trade at approximately Rs 360 per share, leaving the total value of the investment unchanged.
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This is the second time Kotak Mahindra Bank has undertaken a stock split. The previous one was carried out in in September 2010, when the face value of shares was revised from Rs 10 to Rs 5.
Like any corporate restructuring of this nature, today’s price movement is mathematical and does not imply a deterioration in the bank’s financial health or performance.
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