MCX Shares Gain After 1:5 Stock Split Takes Effect

Shares of Multi Commodity Exchange of India Ltd. rose on Friday after the stock started trading on an adjusted basis following its recently announced stock split.

The exchange had earlier said that each share with a face value of Rs 10 would be split into five shares with a face value of Rs 2 each. This marks the first-ever stock split undertaken by the company in its history.

The record date for the split was set as Friday. This means shareholders who held MCX shares in their demat accounts as of Thursday’s close will be eligible for the split, while investors purchasing the shares today will not qualify.

For instance, an investor holding 50 MCX shares as of Thursday’s close would see those 50 shares — each with a face value of Rs 10 — converted into 250 shares with a face value of Rs 2 after a 1:5 split. While the number of shares increases, the overall value remains unchanged, as the market price adjusts in line with the split ratio.

Companies typically undertake stock splits to reduce the share price, making the stock more affordable and accessible to smaller investors, without changing the company’s overall market capitalisation.

As of the September quarter, MCX had no promoter shareholding.

The majority of MCX’s public shareholding is with mutual funds and large investors. According to the latest available data, mutual funds hold more than a 37% stake in the company.

The scrip rose as much as 3.65% to Rs 2,278 apiece, paring gains to trade 0.96% higher at Rs 2,219 apiece, as of 10:41 a.m. This compares to a 0.41% advance in the NSE Nifty 50 Index.

It has fallen 65.11% on a year-to-date basis. Total traded volume so far in the day stood at 4.14 times its 30-day average. The relative strength index was at 71.22.

Out of 12 analysts tracking the company, six maintain a 'buy' rating, five recommend a 'hold,' and one suggest 'sell,' according to Bloomberg data. The average 12-month consensus price target implies an downside of 4%.