However, this apparent 75% decline is not due to any negative news or fundamental weakness, but a result of two corporate actions, a 1:2 stock split and a 1:1 bonus issue, implemented simultaneously by the company.
Nazara Technologies, a leading gaming and sports media company, had earlier approved the sub-division of shares by reducing the face value from Rs 4 to Rs 2. This effectively doubled the number of shares held by investors. In addition to the stock split, the company also announced a bonus issue in a 1:1 ratio, offering one bonus share for every share held as of the record date.
The company had fixed September 26 as the record date for determining eligibility for both the stock split and the bonus shares. As per the T+1 settlement cycle, investors were required to purchase shares on or before Wednesday, September 25, to be eligible.
Following the implementation of both corporate actions, each existing share effectively converts into four shares—two due to the split and two more due to the 1:1 bonus on the split-adjusted holding.
This fourfold increase in the number of shares causes a proportional decrease in the share price, keeping the overall investment value the same.This is the first time Nazara Technologies has undertaken a stock split and the second time it has issued bonus shares, with the last such issuance recorded in June 2022.Also read: Sun Pharma, Cipla & other pharma stocks crack up to 5% as Trump announces 100% tariff on imported patented drugs
Both the stock split and bonus issue aim to enhance liquidity and make the stock more affordable for a wider base of investors.
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