Top 3 Stocks to Watch Out for Stock Splits in November 2023

Every investor has his eyes set on stocks that can fetch good returns. But there are times when the shares of a much sought-after company may not be available for investors to invest in. The reason is the steep price of the shares.

It is during these times that companies decide to split their share.

For instance, Nestle India recently announced that it would split shares to make them more affordable for investors.

Nestle was one of the companies touted to follow Buffett's no stock split rule but alas the company finally decided to reverse course.

A stock split, as the name suggests, is the reduction in the face value of a stock and, thereby, a corresponding increase in the number of outstanding shares.

The prime intention of a stock split is to improve the liquidity in the stock and make it more affordable for investors.

For investors in the hunt for such corporations, here are three stocks to watch out for stock splits in November 2023.

#1 Mittal Life Style

First on the list is Mittal Life Style.

Mittal Life Style is a prominent supplier of fashion fabrics, cotton canvas denim, dupion bottom fabrics, and polyester fabrics.

On 31 August 2023, the company's board of directors approved a sub-division in the ratio of 1:10.

This means one equity share of the company having a face value of Rs 10 each into ten equity shares having a face value of Re 1 each.

Mittal Life Style has set 1 November 2023 as the record date to determine the eligibility of shareholders entitled to stock split.

For the September 2023 quarter, its net sales came in at Rs 214.8 million (m), up 29.8% from Rs 165.5 m.

The net profit for the quarter came in at Rs 1 m, attributed to increased sales.

Going forward, Mittal Life Style aims to diversify its product offerings beyond denim fabrics to include a range of textile products.

The company also plans to invest in expanding its manufacturing facilities to increase production capacity and meet the growing demand for its products.

For more details, see the Mittal Life Style financial fact sheet and quarterly results..

#2 HP Adhesives

Second on the list is HP Adhesives.

HP Adhesives manufactures consumer adhesives and sealants, such as PVC, cPVC, and uPVC solvent cement, synthetic rubber, and more.

The company on 4 September 2023, approved a stock split in the proportion of 1:5.

This means one equity share of the company having a face value of Rs 10 each into five equity shares of the company having a face value of Rs 2 each.

The record date for the stock split is 9 November 2023.

For the June 2023 quarter, HP Adhesives' revenue fell to Rs 603 m from Rs 628 m in the year-ago quarter. The net profit for the quarter came in at Rs 45 m, up 221% from Rs 14 m.

HP Adhesives aims to strengthen its position as a leading adhesives manufacturer by continuously innovating and developing new products. This includes expanding its range of adhesives for various applications.

For more details, see the HP Adhesives company fact sheet and quarterly results.

#3 Hindcon Chemicals

Third on the list is Hindcon Chemicals.

Hindcon Chemicals is a leading manufacturer of construction chemicals and cement additives in India.

The company manufactures a comprehensive range of cement additives, including plasticisers and superplasticisers.

The board has reviewed and authorised the subdivision or split of current equity shares, valued at Rs 10 each and fully paid up, into five equity shares with a face value of Rs 2 each, also fully paid up. This results in a split ratio of 1:5.

The record date for the same is 10 November 2023.

For the June 2023 quarter, the company reported a 15.1% YoY rise in net sales at Rs 256.5 bn. The net profit for the quarter came in at Rs 4.9 bn on the back of cost reduction and increased sales.

Hindcon Chemicals aims to strengthen its position as a leading construction chemicals manufacturer by continuously innovating and developing new products.

For more details, see the Hindcon Chemicals company fact sheet and quarterly results.

Should You Invest in Stocks Undergoing Stock Splits?

Stock splits can improve liquidity and make shares more affordable, potentially attracting more investors. They often signify that a company is confident about its future prospects.

Additionally, stock splits can create a psychological boost, making investors feel like they are getting more for their investment.

However, there are drawbacks too. The most critical one being that a stock split doesn't change the company's intrinsic value. It's essentially a cosmetic change to the stock's price and number of shares.

Also, stock splits can lead to increased trading activity and short-term volatility, which might not align with a long-term investment strategy.

Therefore, while stock splits can be appealing, it's crucial to analyse the company's fundamentals, market conditions, and your own financial goals before making an investment decision.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...