Popular move

Mumbai, Jan. 20: Siemens is planning a stock split to increase its liquidity in the market and make the scrip more affordable to retail investors.

The board of the engineering company will meet on January 27 to consider a proposal for a stock split.

The move is subject to the approval of its shareholders. The present face value of the shares is Rs 10.

Brokers feel the face value of the share is likely to be reduced to Rs 2 or Rs 1. In anticipation of the split, the stock today moved up to an almost 52-week high of Rs 4,102.8 on the BSE. The stock rose by a whopping Rs 395.30 to end at Rs 4102.80. It was the fifth-largest traded scrip in the exchange with close to 2.10 lakh shares being transacted, resulting in a turnover of Rs 83.87 crore.

“When a company announces its plans of a stock split, the shares usually appreciate substantially before the split. Siemens stocks also experienced the same today,” said Arun Kejriwal, director of KRIS.

In the recent past, companies like Ranbaxy Laboratories, ITC, Bharat Forge, Bajaj Hindusthan, Gujarat Ambuja Cements and Radico Khaitan had also decided to go for a stock split.

The Siemens scrip has had a phenomenal run on the stock exchanges over the past one year backed by its robust performance and strong order book.

The company has lined up a Rs 300 crore capital expansion, with Rs 150 crore in power, Rs 110 crore in consolidation of offices across the countries and the remaining in automation.

For the year ended September 30, 2005, the company’s profit after tax rose 68 per cent to Rs 2,54.8 crore against last year’s Rs 151.4 crore. The turnover of the company increased 54 per cent to Rs 2,748.5 crore compared with Rs 1,790 crore during the previous fiscal.

The profit before tax stood at Rs 363 crore, an increase of 58 per cent over last year's Rs 229.9 crore. Siemens also plans to foray into the water solutions segment within the infrastructure sector in the country.