A stock split is when a company reduces the face value of its shares, which increases the number of shares in circulation proportionally. The total value of your holding doesn’t change, only the face value, share count, and market price adjust.
A split is expressed as a ratio. In a 2:1 split, the face value is halved say from ₹10 to ₹5 and the number of shares doubles accordingly. If you hold 100 shares at ₹1,000 each with a face value of ₹10, after a 2:1 split you’ll hold 200 shares at ₹500 each with a face value of ₹5. Your total holding value stays at ₹1,00,000.
When a share price climbs very high, it can become inaccessible for smaller investors. A split brings the price down to a more affordable level, which typically improves trading volumes and liquidity without changing the company’s fundamentals.
Easy & quick
Leave A Comment?