Mumbai, April 28: HDFC Ltd — the country’s largest player in the housing finance segment — is planning a stock split.

The company informed the stock exchanges today that its board of directors would meet on May 3 to decide on sub-dividing its equity shares, which currently have a face value of Rs 10 per share.

A stock split is often seen as an investor friendly move (particularly for retail investors) as shares become affordable. Such a move also stokes demand for the stock.

A stock split also enhances the number of shares traded in the market, thereby improving its liquidity.

The HDFC share today closed at Rs 2,810.40, a drop of 1.59 per cent, or Rs 45.40.

“There are many retail investors who cannot enter into the stock at the current prices. However, a stock split will make the shares slightly affordable,” said a market analyst.

HDFC is also set to announce its quarterly and annual results for year ended March 31, 2010 on May 3.

The HDFC board will decide on the new face value of the stock – and this will have to be ratified later by the shareholders at the next annual general meeting.

Despite tough competition in the housing finance segment from aggressive banks, HDFC has consistently been notching a strong bottomline growth on the back of rising loan disbursements. Loan disbursements of the corporation during the nine-month period ended December 31, 2009 amounted to Rs 33,527 crore compared with Rs 27,211 crore in the previous corresponding period, representing a growth of 23 per cent.

During the third quarter, it posted a similar rise in net profit at Rs 671.25 crore.

This has been reflected in its stock price that climbed nearly 86 per cent from the levels prevailing on April 1, 2009.

HDFC is not the only company to consider a stock split. Sterlite Industries brought down the face value of its stock to Rs 1 per share from Rs 2, Engineers India Ltd and Jayshree Tea & Industries sub-divided the face value of their shares to Rs 5 per share from Rs 10 earlier.