1:2 Stock Split: Penny Stock Rises 11%, Hits New 52-Week High On Turning Ex-Split

Computers, hardware and equipment manufacturer, Shradha Industries' share price skyrocketed by nearly 11% and touched a new 52-week high on Tuesday as they turned ex-split. The company is a penny stock trading below Rs 40 per share with a market value of less than Rs 100 crore.

On Tuesday, the stock touched a new 52-week high of Rs 37 apiece, rising by 10.81% at least during the day so far.

At the time of writing, the stock traded at Rs 35.99 apiece, up by 7.8% on BSE. Its market cap is around Rs 87.75 crore.

As per the regulatory filing, the company's board of directors considered, reviewed and approved (fixed), Tuesday, 26th September 2023, as the Record Date for determining the eligibility of Shareholders for sub-division /split of Equity Shares. Hence, these shares have also turned ex-split on September 26 as well.

Under its stock split, the company is sub-dividing 1 exiting equity share having a face value of Rs 10 each into two equity shares having a face value of Rs 5 each.

Generally, listed companies declare a stock split of already owned shares into much smaller shares. This is done to improve liquidity by breaking the shares into smaller sizes. The face value of the shares reduces in proportion to the split ratio, however, there is no impact on the company's share capital and reserves. Although the price value of a stock reduces in a stock split, it the number of shares held rises in the investors' portfolio of that specific stock.

As per ICICI Direct's website, the key strengths of Shradha Industries are that -- company has no debt, and it has a Zero Promoter Pledge. Among weaknesses, the negative breakdown third support (LTP

Founded in 1990, Shradha Industries is mainly engaged in the business of trading items like Computers, computer hardware & accessories and also deal in all types of PP mats and all allied kind of products in the state of Maharashtra. The company has diversified from trading of PP Mats of various dimensions like Handmade PP Mats, PP Mats with rubber backing, and Poly Rope Mats.

Additionally, the company is also engaged in trading PP granules (Polypropylene granules) which can be used for manufacturing PP Mats, weaving sacks, yarn and production of plastic bags and used in various Industries Textiles, Packaging Industry, Stationary Industries to trading Computers, Computer peripherals, Computer Hardware, and Software, data processors, computerized telecommunication system and networks, calculators, tabulators, machines, appliances, accessories, devices and instruments of every kind and activation for use of industrial, commercial or any other purpose.