Stock split appears to be the flavour of the season with Bank of Baroda becoming the latest bank — public or private — to opt for it.
The bank’s board of directors has given its nod to split the face value of shares from ₹10 into five shares of ₹2 each, subject to all approvals.
BoB is the latest bank to go for stock split in view of the ramp-up in price witnessed by the banking stocks.
It was Axis Bank that began the trend of stock split among banks recently when it decided to go for a 5:1 stock split (five shares of ₹2 each for every share of ₹10). Since then, Jammu & Kashmir Bank (already in effect) and SBI have chosen a 10:1 split (apparently because of the high value of their shares).
The other banks that had taken to stock split — ICICI Bank, Canara Bank, Corporation Bank, PNB and now BoB — have chosen the 5:1 stock split ratio apparently to make their stocks more affordable to the investors.
Of these, while the shares of ICICI Bank are trading at around ₹1470, PNB and BoB are at sub ₹1,000 levels. Corporation Bank (₹317) and Canara Bank (₹357) are trading at far lesser value compared to the other banks who have decided to split the face value of their shares.
During last year, BoB had earned a net profit of ₹4,541.08 crore and the EPS was ₹107.38. At its current price (the stock is trading at ₹ 899.80 on the BSE), the PE ratio works out to less than 10, making the stock look not very expensive. But the announcement did not fire up the stock price as it gained just ₹2 after the announcement was made.