On Monday, HDFC Bank in a stock exchange filing said that its board will consider splitting each of the bank's share into two later this month.
"Pursuant to the applicable provisions of the Regulations, we wish to inform you that the Board of Directors of the Bank would inter‐alia consider a proposal for sub-division of Bank's equity shares from 1 (one) equity share of face value of Rs 2/- each to 2 (two) quity shares of the face value of Rs 1/- each, at their meeting to be held on May 22, 2019," the bank said in its statement.
Shares of HDFC Bank closed at Rs 2,328.45 apiece on Monday. The lender has about 272.33 crore shares issued at the face value of Rs 2 at present.
Publically listed companies normally opt for stock split when the companies feel that the price of the shares have increased to levels much higher than companies in the same line of business. It makes the shares of the company more affordable for small retail investors and increases the stock's liquidity without affecting the market capitalisation.
If HDFC Bank's board approves the 2 for 1 stock split, its share price will be halved and the number of shares in circulation will double.
HDFC Bank registered a 23 percent increase in its net profit for the March-2019 ended quarter to Rs 5,885.12 crore on account of its healthy growth in net interest income.