Lucky Cement announces a 5-for-1 stock split

KARACHI: Lucky Cement Limited (LUCK) announced a 5-for-1 stock split in its notice to the PSX on Friday, bringing down the face value of an ordinary share to Rs2 instead of the existing Rs10 per share.

The said recommendation was made in its board meeting held on February 20, which is subject to approval by its shareholders in an extra ordinary general meeting (EoGM) to be held on March 18.

Once the stock split becomes effective, the existing 293 million ordinary shares for Lucky Cement Limited will be multiplied by the stock split factor of 5, resulting in 1,465 million ordinary shares. Similarly, the pre-split stock price of each share will stand divided by the same factor.

Stock splits are a common strategy employed by companies worldwide to enhance market accessibility, liquidity, and investor participation. By reducing the price per share, companies make their stock more affordable to a broader range of investors, particularly small and retail investors, fostering a more inclusive shareholder base. A split also increases the number of shares in circulation, improving market liquidity and making trading more efficient without causing price volatility.

Moreover, a stock split signals confidence in a company’s financial strength and long-term prospects, reinforcing investor trust and positioning the company for sustained success. Unlike issuing bonus shares, which have tax implications, stock splits provide a tax-efficient mechanism for shareholders to benefit from a company’s growth.

M Ali Tabba, CEO of Lucky Cement Limited, stated that the company and its subsidiaries have experienced significant growth over the years. He emphasised that the stock split is aimed at sharing this success story with a broader base of investors, both locally and globally. He further highlighted that the company’s strategy of reinvesting profits into growth and expansion has consistently delivered strong results and made it more resilient to economic shocks.

Citing the company’s two share buybacks, he noted that shareholders who chose to retain their shares will now own a larger percentage of the company for the same initial investment, benefiting from the company's sustained growth.