Multibagger stock has risen nearly 600% in one year. Now it weighs stock split

Darshan Orna Ltd on Monday informed the stock exchanges that its board will meet on 6 April to consider and approve splitting of shares of the company.

"We hereby inform pursuant to Regulation 29 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, that a Meeting of the Board of Directors of the Company will be held on Wednesday, 6th April, 2022 at 2:00 pm at the registered office of the company to consider and approve splitting of shares," the company said in a filing

On Monday, Darshan Orna shares were down 4.96% in noon deals at ₹88.05 on BSE. In the past one year, the stock has given multibagger returns to investors, rising nearly 600%.

On a Year-to-Date basis, the company's scrip is up just over 14% so far in 2022.

Incorporated in 2011, Darshan Orna was converted into a public company in 2015. It is a Small and Medium Enterprise (SME) engaged in the gold and silver jewellery and ornaments business.

The company started its commercial operations as a wholesaler and trader of gold and silver jewelries and ornaments by setting a unit in Manek Chowk area of Ahmedabad in North Gujarat.

Stock Split

A stock split or stock division increases the number of shares in a company. For instance, after a 10-for-1 split, each investor will own 10 shares for every one share he holds and each share will be worth half as much. A stock split causes a decrease of market price of individual shares, but does not change the total market capitalisation of the company.

A company may split its stock when the market price per share is so high that it becomes unwieldy when traded. One of the reasons is that a very high share price may deter small investors from buying the shares. Stock splits are usually initiated after a large run up in share price.

The main effect of stock splits is an increase in the liquidity of a stock. There are more buyers and sellers for 10 shares at ₹100 than 1 share at ₹1,000. Some companies avoid a stock split to obtain the opposite strategy, by refusing to split the stock and keeping the price high.