What is Stock Split? How It Affects Share Price and Your Holdings
A stock split divides each share into smaller units without changing total value.
A stock split divides existing shares into multiple shares by reducing the face value. A 1:2 split means each Rs.10 face value share becomes two Rs.5 face value shares. The stock price halves but your total number of shares doubles. Total value remains unchanged.
If you own 100 shares at Rs.2,000 each (Rs.2 lakh total) and the company does a 1:5 split, you get 500 shares at Rs.400 each (still Rs.2 lakh). Face value changes from Rs.10 to Rs.2. The company has made the stock more affordable and liquid.
Why do companies split stocks?
To make shares more affordable for retail investors. A stock at Rs.40,000 (like MRF) limits retail participation. Splitting to Rs.4,000 makes one lot accessible. Higher liquidity from more tradeable shares also benefits the stock.
Does a stock split create value?
No. Like cutting a roti into more pieces, the total remains the same. But improved liquidity and retail participation can indirectly boost demand and price over time.
Track stock split announcements on Stockk Equity. Invest in split stocks through your Stockk demat account.
Investments in securities market are subject to market risks. This article is for educational purposes only and does not constitute investment advice. INDIRA SECURITIES PRIVATE LIMITED : SEBI REG. NO.: INZ000188930, NSE TMID: 12866, BSE TMID: 663, CDSL DPID: 17000, MCX TM ID: 56470, NCDEX TM ID: 01277, CDSL REG.NO.: IN-DP-90-2015, CIN:U67120MP1996PTC085111, RA SEBI REG. No.: INH000023269, IA SEBI REG No.: INA000021410. For any complaints pertaining to securities broking please write to [email protected], for DP related to [email protected].
Frequently Asked Questions
How is stock split different from bonus?
Split changes face value. Bonus keeps face value, capitalizes reserves. Both increase shares and reduce price. Effect on your portfolio value is the same: zero immediate change.
Do all exchanges support splits?
Yes. NSE and BSE process splits automatically. Your demat account reflects new shares. Use StockkAsk at stockk.trade/stockkask for corporate action tracking.
Can a company reverse a split?
Yes. This is called reverse stock split or share consolidation. It reduces shares and increases price. Used when stock price falls very low.
Does face value matter after split?
Face value becomes smaller but has no practical impact on trading. A Rs.1 face value share and a Rs.10 share trade purely based on market valuation.
Is a stock split bullish or bearish?
Neither directly. But markets often react positively because it signals management confidence and improves accessibility. Historical data shows modest short-term positive returns after splits.
Investments in securities market are subject to market risks. This article is for educational purposes only and does not constitute investment advice.
INDIRA SECURITIES PRIVATE LIMITED : SEBI REG. NO.: INZ000188930, NSE TMID: 12866, BSE TMID: 663, CDSL DPID: 17000, MCX TM ID: 56470, NCDEX TM ID: 01277, CDSL REG.NO.: IN-DP-90-2015, CIN:U67120MP1996PTC085111, RA SEBI REG. No.: INH000023269, IA SEBI REG No.: INA000021410
