CAMS shares fall after stock begins trading adjusted for its stock split

Shares of Computer Age Management Systems Ltd. (CAMS) fell nearly 3% on Friday, December 5, as they began trading adjusted for their stock split that the company announced during its quarterly results.

CAMS, the Mutual Fund transfer agency, that serves asset management companies, had announced that it will split one share with a face value of ₹10 into five shares of face value of ₹2.

Record date for the stock split was fixed for Friday, December 5. This means, that those shareholders, who had shares of CAMS in their demat account as of Thursday's closing, will be eligible for the stock split. Those who buy the shares today, will not be eligible for the same.

For example, if an investor had 30 shares of CAMS as of Thursday's close, a 1:5 split would mean that his 30 shares with a face value of ₹10 each, will turn into 150 shares of face value of ₹2 each. The stock price will adjust in proportion, while the value of the shares will remain the same.

This is the first instance of CAMS announcing a stock split of its equity shares.

Companies generally carry out a stock split to make shares more affordable and attract a wider range of smaller investors by lowering the share price and without altering the company's market value.

As of the September quarter, CAMS does not have any promoter holding. Out of the 100% public shareholding, Mutual Funds own 14.34% stake, LIC has a 3.4% stake, while Foreign Portfolio Investors, including Goldman Sachs, JPMorgan, Vanguard, Abu Dhabi Investment Authority, among others have a 44.3% stake. As many as 4.6 lakh retail shareholders, or those with authorized share capital of up to ₹2 lakh, have a 23.9% stake in the company.

Shares of CAMS are trading 3.2% lower on Friday at ₹766.7 adjusted for its stock split. The stock has risen 6% in the last one month, but has been an underperformer this year, declining 22% so far.