HP Adhesives (NSE: HPAL) shares should drop by 80% today. This is a slightly off thing being done, that has to be said. But it is also a purely nominal fall in HPAL shares. This does not damage wallets - like an 80% fall in the real price would do. There’s some technical problem that they’re trying to solve here but it’s not obvious what it is. For this does look more than a little strange to us.
The business line at HPAL: “The solvent cement product range has always been the pride of the group due to our constant vision and leadership in the business. It was also the start of the HP Group which has evolved a lot since its inception. HP Group founded on the principals of trust and reliability has always put its stake holders (employees, customers) first. It has envisioned of building an agile customer friendly organization that has always given the market par plus product and services. The solvent cement business was started when the business of using plastic itself was at a nascent stage, but the vision of our founder has led us to become a brand in the era of plumbing adhesives. All the groups business is well oiled machined with the right mix of talent, technology, capital, resources.” And, well, OK. It makes plumbing glue - an extremely important product that aids cilisation in holding itself together. Also not a wholly glamorous line of business and possibly not worthy of quite such excited enconomica. But there we are.
HP Adhesives share price from Google Finance
The issue is that the share price will drop by 80% today. Which is odd, but true. Ass announced: “This is in continuation to our communication with respect to sub-division of 1 (One) Equity Share of nominal value of Rs. 10/- (Rupees Ten only) each fully paid up into 5 (Five) Equity Shares of Rs. 2/-(Rupees Two only) each fully paid up with effect from Thursday 9th November, 2023 i.e. Record Date.”
This is a stock split. The usual reason for these is that different stock markets have different ranges for what they consider to be the “right” range for a share price. On the New York markets that tends to be in the $10 to $100 range. In London, £1 to £10. If you’re within these ranges then people will think that the stock is a good deal, outside them “cheap “ or too expensive.
We were not aware that under Rs 100 was the desirable range for an Indian share price but if that’s what the directors of HP Adhesives think then good luck to them. The issue for us is that the seeming 80% drop in the share price is a purely technical and nominal thing, not a draining of wallets.
