What is a Stock Split and How does it affect Investors?
A stock split happens when a company increases the number of its shares by giving existing shareholders more shares, based on a set ratio—like 2-for-1, 3-for-2, or 3-for-1. Even though you get more shares, the total value of your investment stays the same because the share price drops proportionally.
📅 Upcoming Stock Splits
Here are some companies planning stock splits soon:
| Company | Old FV | New FV | Announcement | Record Date | Split Date |
|---|---|---|---|---|---|
| Navkar Urbanstructure Ltd | 2 | 1 | 07-03-2025 | 09-05-2025 | 09-05-2025 |
| Shantai Industries Ltd | 10 | 2 | 27-02-2025 | 09-05-2025 | 09-05-2025 |
| Rajasthan Tube Mfg. Co Ltd | 10 | 1 | 17-02-2025 | 08-05-2025 | 08-05-2025 |
| Info Edge (India) Ltd | 10 | 2 | 05-02-2025 | 07-05-2025 | 07-05-2025 |
| United Polyfab Gujarat Ltd | 10 | 1 | 12-02-2025 | 02-05-2025 | 02-05-2025 |
| Ami Organics Ltd | 10 | 5 | 22-02-2025 | 25-04-2025 | 25-04-2025 |
| Ranjeet Mechatronics Ltd | 10 | 5 | 18-02-2025 | 21-04-2025 | 21-04-2025 |
| Akme Fintrade (India) Ltd | 10 | 1 | 07-02-2025 | 18-04-2025 | 17-04-2025 |
| Kapil Raj Finance Ltd | 10 | 1 | 28-02-2025 | 15-04-2025 | 15-04-2025 |
| Enbee Trade & Finance Ltd | 10 | 1 | 27-01-2025 | 11-04-2025 | 11-04-2025 |
| Pervasive Commodities Ltd | 10 | 1 | 06-02-2025 | 07-04-2025 | 07-04-2025 |
⚠️ Disclaimer: This table is for informational purposes only. Please verify the details before making any investment decisions.
💡 What Actually Happens in a Stock Split?
It’s simple: the number of shares you own increases, but the price per share decreases, so your total investment stays the same.
For example, in a 2-for-1 split:
- If you own 1 share at ₹800, after the split you’ll have 2 shares at ₹400 each.
- Your investment is still worth ₹800.
It doesn’t change the company’s value—it just makes each share more affordable and easier to trade.
⚙️ How Does a Stock Split Work?
A stock split doesn’t affect the company’s overall value, but it lowers the price per share, making it more attractive to small investors. This often increases the number of buyers and boosts market activity.
It also creates a sense of affordability and opportunity, which can make the stock more appealing—even though nothing has fundamentally changed in the company’s performance.
Also Read: How do Currency Fluctuations Impact Multinational Companies?
🔍 Stock Split Example
Let’s say:
- You own 100 shares of Company XYZ, each worth ₹800.
- Total investment = ₹80,000
Now, the company announces a 2-for-1 split:
- You now have 200 shares, each priced at ₹400.
- Investment value = still ₹80,000
Nothing changes in value—just the number of shares and price per share.
🧾 Types of Stock Splits
1. Regular Stock Split
This is the most common type. The company issues more shares to current shareholders. The total market value stays the same, but each share becomes cheaper.
2. Reverse Stock Split
This does the opposite. Instead of issuing more shares, the company reduces the number of shares by increasing the price per share.
Example:
- You own 10 shares at ₹4 = ₹40
- After a 2-for-1 reverse split, you have 5 shares at ₹8 = ₹40
Again, your total investment stays the same.
👥 How Does It Affect You?
If you already own shares, a stock split means:
- You’ll own more shares at a lower price.
- Your portfolio may become easier to manage.
- There’s more liquidity—making it easier to buy or sell.
If you’re thinking of investing, splits make expensive stocks more affordable, giving you a chance to get in.
📊 Real-Life Examples
Example 1:
XYZ Ltd does a 1:10 split (1 share becomes 10).
- Before: ₹25,000/share
- After: ₹2,500/share
This made the stock more affordable and boosted trading activity.
Also Read: What are the Best Stock Trading Apps for Beginners?
Example 2:
ABC Ltd announces a 1:5 split.
- Before: ₹500/share
- After: ₹100/share
Again, easier for new investors to buy in.
🗓 Key Dates You Should Know
- Record Date: The date the company checks who owns its shares.
- Ex-Split Date: The day the new split-adjusted price shows up in trading.
If you’re a shareholder by the record date, you’ll get the extra shares.
🔄 What’s a Reverse Stock Split?
In a reverse split, the company combines existing shares into fewer ones but raises the price proportionally. It’s usually done to:
- Boost the share price
- Improve the stock’s image
- Meet exchange listing requirements
Your investment value stays the same—but you end up with fewer, higher-priced shares.
✅ Benefits of a Stock Split
- More Liquidity
More shares = more trading = easier to buy/sell - Attracts New Investors
Lower prices bring in people who couldn’t afford it before - Feels More Affordable
A ₹3,000 stock becomes ₹600 after a 5:1 split—much easier for small investors - Could Boost Market Cap Over Time
If investor interest grows, demand can push the price up naturally
⚠️ Downsides to Keep in Mind
- No Real Value Added
It doesn’t make the company more profitable or valuable - More Volatility
Lower-priced shares often attract short-term traders - Can Send the Wrong Signal
Too many splits might suggest the company is more focused on appearance than real growth
Also Read: What are the Top Charting Tools for Technical Analysis?
Final Thoughts
Stock splits are cosmetic changes—they don’t affect the company’s actual worth but can influence investor perception, increase accessibility, and improve liquidity.
They’re especially helpful for small investors looking to own shares in big companies without spending a fortune. But remember—before buying into a stock just because it split, look at the fundamentals too.
Post Comment