Stock splits are generally done when the denomination of the share price rises. A stock split helps the share price to come down, which could increase its popularity among retail investors. Market participants perceive lower denomination of a stock as a cheaper one. Shares of HDFC Bank rallied 17 per cent in the last one year to close at Rs 2328.40 on Monday.
This is the second time HDFC Bank is splitting the face value of its stock. In July 2011, the private lender split its stock in the ratio of 1:5 – one share of Rs 10 split into 5 shares of Rs 2 each. HDFC Bank has an equity capital of Rs 545 crore with 220 crore fully paid shares.
The bank also said in a regulatory filing that trading window for dealing in shares of the bank will be closed for designated persons from May 7 to May 24.