IMPLICATIONS OF STOCK SPLIT IN COFORGE LIMITED

COFORGE LIMITED has fixed a record Date of June 04, 2025 for the purpose of stock split in the ratio 5:1 with face value of Rs10.

What is adjustment factor in COFORGE LIMITED?

Adjustment factor for Stock split of A: B is defined as (A/B).

In the case of COFORGE LIMITED, the adjustment factor is (5/1) = 5, since the split ratio is 5:1.

What will be the new Strike price & lot size for Options?

Strike Price: The adjusted strike price will be arrived at by dividing the old strike price by the adjustment factor i.e., 5.

For instance, the new strike price for 8300 = 8300/5 = 1660

Lot Size: The adjusted lot size will be arrived at by multiplying the old market lot by the adjustment factor.

Old lot size=75

Adjustment factor = 5

New lot size = 75*5= 375

How price is calculated? 

If you have a long / short call option position

Contract Value Before Split:

Suppose you had 1 call option with a strike price of 8300, and the lot size was 75 shares. The total contract value would be:

Contract Value = Lot Size *Strike Price = 75 *8300 = ₹6,22,500

Contract Value After Split:

After the stock split, the strike price is 1660, and the new lot size is 375 shares. The new contract value would be:

New Contract Value = New Lot Size *New Strike Price = 375 *1660 = ₹6,22,500

So, Contract value is not affected.

 Key consideration

The adjustments ensure that while individual elements (strike price, lot size, and premium) change, the total position value remains unchanged. Your short position will still reflect the same overall liability, but the numbers will be adjusted proportionately to account for the split.

The final adjustment prices will be issued by the exchange one day before the effective date.

Same goes for the future contracts, there’s no change in your overall exposure or margin requirement. The price decreases and the lot size increase, keeping the contract value constant.

What is the new price for future contracts?

You can calculate the same as follow

= (Closing price / 5) *New lot size

Frequently Asked Questions:

a)   What will happen to F&O open positions in Coforge Limited?

For clients holding F&O contracts expiring on 26^th June, 2025, 31^st July, 2025 and 28^th August 2025: These contracts shall expire on respective expiries & will be adjusted according to the framework prescribed by SEBI. The adjustment for Futures will be Price and Lot Size & for Options will be Strike Price and Lot Size and option premium.

b)   What is the impact on my mark to market settlement?

Since the futures price will be adjusted, clients' MTM values will also reflect this change. However, the overall position in value terms should remain neutral because both the price and the lot size change in proportion.

c)     Will the open interest change after the stock split, and how is it adjusted?

The open interest in terms of the number of contracts or lots held remains the same, but the actual number of shares in each contract changes. So, while the contract count doesn't change, the shares per contract do, ensuring the overall position value is unaffected.

d)    Is there any change in margin requirements due to the stock split?

Typically, the margin requirements are adjusted to reflect the new lot size and contract price. Since the value of the position remains the same, there is no significant change in the total margin required. However, brokers may notify any minor adjustments for operational purposes.

e)     What is the margin required for revised COFORGE LIMITED contracts?

Margin will be as per the exchange rule of SPAN + ELM

f)      How do F&O expiries get adjusted after a stock split?

The expiry dates of F&O contracts remain the same; only the price and lot size adjustments take place. No changes are made to the expiry or contract duration due to the split.

g)    Can I carry over my existing F&O positions post-split, or do I need to take any action?

Yes, you can carry over your existing F&O positions post-split. The exchange automatically adjusts the strike price, lot size, and contract terms, so you don’t need to take any specific action. However, it’s essential to monitor any notifications from your broker or the exchange for smooth handling of the adjustment.

h)     When will the adjustment be reflected?

The adjustments in F&O positions will be made by the exchange at the time of the ex-spilt date. The expected changes to be seen one day before ex-date i.e. 3^rd June ,2025

i)      What happens if I exit my position before the ex-spilt date?

If you exit F&O position before the ex-spilt date, they will not be affected by the bonus       adjustment. The exit will occur at the market prices prior to the adjustment

j)      How one can check corporate action while having an open position?

It is shown in order book in offline mode. The changes will reflect before the execution date, on your F&O open position as shown in example below:

k)     Will it impact my profit / losses?

No, it does not affect your profit and losses as the contract value remains unchanged.

l)       What will be the impact on portfolio?

The portfolio will show the following transactions.

Adjustments in portfolio are shown as below taking an example of the CANBAN contract

For Example - 550-PE, 540-PE, 520-PE strikes is valued at 110-PE, 108-PE, 104-PE respectively    as shown above in portfolio details.

Transactions will show the price adjustment at ₹0.05 with adjusted strike price with adjusted lot size as shown below:

Your total position value is unaffected by the split; it's just the numerical parameters (strike price, lot size, and premium) that are adjusted accordingly. One can exit its position partially as the number of lot size is increased.

In summary, the stock split only adjusts the numerical values of strike prices, lot sizes, and premiums while keeping the overall value of F&O positions unchanged.

It is advised to monitor your F&O positions in COFORGE LIMITED and take timely action. 

NSE Circular: Circular