MCX shares gain after adjusting for stock split — What 2.4 lakh retail shareholders should know

Shares of Multi Commodity Exchange of India (MCX) Ltd. gained on Friday, January 2, after the stock began trading adjusted for its stock split announced earlier.

The company had recently announced that one share of ₹10 each will be split into five shares of ₹2 each.

This is the first stock split that the company has carried out in its history for its shareholders.

Record date for the stock split was fixed as Friday, January 2. This means, those shareholders, who had shares of MCX in their demat account as of Thursday's closing, will be eligible for the stock split. Those who buy the shares today, will not be eligible.

For example, if an investor had 50 shares of MCX as of Thursday's close, a 1:5 split would mean that those 50 shares, which currently have a face value of ₹10 each, will turn into 250 shares of face value of ₹2 each. While the number of shares will increase, the value will remain the same. The share price will adjust according to the split ratio.

Companies generally carry out a stock split to make shares more affordable and attract a wider range of smaller investors by lowering the share price and without altering the company's market value.

MCX did not have any promoter shareholding at the end of the September quarter.

Most of the public shareholding in MCX lies with Mutual Funds and major investors. As per the most recent data available, Mutual Funds had over 37% stake in the company.

Kotak Mahindra Bank, the Mumbai-based private lender had a 15% stake in MCX, which at the current market price, is valued at ₹8,400 crore.

MCX also has over 2.4 lakh retail shareholders, or those who have an authorized share capital of up to ₹2 lakh, who have a 15.3% stake in the company, as per the September shareholding.

Shares of MCX are trading 2.5% higher on Friday at ₹2,254. Morgan Stanley had recently upgraded the stock and had raised its price target by over 66%.