Published by: S&B Advisors and Consultants (Private) Limited
Author: Ms. Saima Morkas
Date: August 9, 2025
Over the past year, the Pakistan Stock Exchange (PSX) has witnessed a notable trend: an increasing number of publicly listed companies are opting for share splits. From industry giants like Lucky Cement and Systems Limited to recent announcements by Lucky Core Industries and Kohinoor Mills, the wave of stock splits is reshaping investor dynamics on the bourse.
But what’s driving this trend? And what does it signal about the evolving landscape of corporate finance in Pakistan?
š Understanding a Share Split
A share split is a corporate action where a company increases the number of its outstanding shares by issuing more shares to current shareholders. Although the number of shares increases, the overall value of the company remains unchangedāeach share is simply worth less.
For example, in a 5-for-1 split, each shareholder receives 5 shares for every 1 share they hold, and the price per share is divided by 5.
š” Why Are Companies in Pakistan Opting for Share Splits?
| S. No. | Reasons | Description |
| 1. | Enhancing Liquidity and Affordability | Share splits reduce the per-share market price, making stocks more accessible to a larger pool of retail investors. This increased affordability often leads to: Greater trading volumesImproved liquidityBroader investor participation This is particularly relevant in Pakistan, where retail investors are price-sensitive and more likely to invest in lower-priced shares. |
| 2. | A Strategic Alternative to Bonus Shares | Historically, many companies in Pakistan issued bonus shares as a means to reward shareholders. However, recent tax reforms have: Eliminated the tax-exempt status of bonus sharesMade stock splits a more tax-efficient alternative In this context, share splits offer similar shareholder benefitsāwithout triggering tax consequences or affecting retained earnings. |
| 3. | Positive Market Signalling | A share split is often interpreted as a signal of confidence in the companyās future performance. It indicates that the companyās management believes the stock is performing well enough to justify a split, which can boost investor sentiment and result in upward pressure on the share priceāeven though the intrinsic value remains unchanged. |
| 4. | Facilitating Employee Stock Plans and Capital Restructuring | Lower nominal share prices are useful for: Employee Stock Option Plans (ESOPs)Future bonus or dividend reinvestment programsIndex eligibility or improving free float |
All of which contribute to a more dynamic and inclusive capital structure.
š Recent Share Split Activity on the PSX
Several leading companies have recently announced or completed share splits:
| Company Split | Ratio | Status | Objective |
| Lucky Cement | 5-for-1 | Approved | Enhance share accessibility and liquidity |
| Systems Limited | 5-for-1 | Approved | Attract retail participation |
| Lucky Core Industries | 5-for-1 | Approved (July 2025) | Support broader investor base |
| Thatta Cement | 5-for-1 | Announced | Improve market activity |
| Kohinoor Mills | 10-for-1 | Announced (Aug 2025) | Expand float and enable global structuring |
| Arif Habib Corp. | 10-for-1 | In process | Encourage liquidity and investor interest |
| Airlink Communications | 5-for-1 | Proposed | Improve affordability and trading frequency |
š® Looking Ahead
As Pakistanās corporate sector adapts to shifting regulatory frameworks and market behaviour, share splits are emerging as a smart, multi-faceted tool for companies seeking to align their share structures with investor expectations and fiscal realities.
With regulatory conditions evolving and retail investor interest on the rise, we expect this trend to continue in the coming quartersādriven by financial prudence, market engagement, and strategic signalling.
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