Dr. Reddy's to consider stock split on July 27, shares close lower

The pharmaceutical major informed the stock exchanges in a filing that its board of directors will meet on July 27 to consider a proposal for a stock split of existing equity shares of a face value of ₹5 each, fully paid up, including the American Depositary Shares.

The pharma major said in the exchange filing that the Board will determine the alteration in the company's share capital by sub-division of shares, subject to the approval of the company's shareholders.

Companies usually conduct stock splits to improve trading liquidity in their shares. Stock splits also make company shares more affordable to investors as the number of shares increases and the share price decreases proportionately.

Shares of Dr Reddy’s Lab opened higher at ₹6,938.9 and rallied as much as 1.07% from its previous close to hit an intraday high ₹6,938.9 apiece on the NSE. However, the pharma stock pared early gains to close 0.79% lower at ₹6,811 apiece on the NSE.

The stock price of Dr Reddy’s Lab has gained 151% in the past few years, from around ₹2,705 per share in July 2019 to ₹6,865 per share on July 23. Dr Reddy’s shares have rallied around 26% in the past year, while in 2024, so far, the stock has given returns of around 17%.

Dr Reddy’s Lab last month announced the acquisition of Nicotinell and related brands from US-based Haleon Group for cash consideration of GBP 458 million and additional performance-based contingent cash payments of up to GBP 42 million in CY 2025 and CY 2026.

The company stated that through these acquisitions, it is adding a market-leading brand, Nicotinell, along with three local market-leading brands such as Nicabate, Habitrol, and Thrive to its portfolio in all formats, such as lozenge, patch, gum as well as pipeline assets outside of the United States.