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Stock Split

A stock split is a corporate action which divides the face value of the outstanding shares of a company, thus increasing the number of shares available in the markets as free float.

A corporate action ranges from dividend payments, bonus issues, stock splits to mergers & acquisitions (M&As), and can materially impact you as a shareholder.

A corporate action is a great indicator of the company’s financial health and its short-term future.

If you're a shareholder or considering buying shares, you need to know the effect of such corporate actions on the company’s stock.

Here are some effects of a stock split:

  • Current shareholders are rewarded on a proportional basis thus unaffecting the value of their stake in the company
  • Potential buyers of the stock increase as the price per share goes down
  • Liquidity of the stock gets a boost
  • The market capitalization of the company remains the same even after the stock split

Stock splits are usually undertaken by companies with high per-share price and are gratifying to shareholders, both immediately and in the longer term.

Do you know that legendary investor Warren Buffett hates stock splits? His multinational conglomerate company Berkshire Hathaway has never undergone a stock split.

Check out the Indian companies that swear by Buffett’s no-split rule.


Tata Steel Announces Dividend and Stock Split. 5 Takeaways from the Company's Q4 Earnings

May 4, 2022

For fiscal 2022, Tata Steel clocked a net profit of Rs 417.5 bn, a more than five-fold jump from previous fiscal's figures.

7 Indian Companies that Swear by Buffett's No-Split Rule

Sep 28, 2021

Just like Warren Buffett's Berkshire Hathaway, these Indian companies have not split their shares.

LIC IPO: All We Know So Far

Aug 23, 2021

The upcoming LIC IPO is so huge that it may be split into two parts.

GAIL Misses Earnings Estimates. Company Ditches Plan to Split

Jun 10, 2021

GAIL's earnings and proposal to monetise pipelines through InvIT route, puts stock in focus.

5 Indian Companies with the Highest Share Price. Are they Likely to Split?

May 3, 2022

Highly priced shares like MRF have not split its shares in a long time. Is it on the cards in the foreseeable future?

IRCTC Zooms 6% to Hit Record High. Key Triggers Driving the Stock

Sep 6, 2021

IRCTC is up 100% this year as the unlocking theme plays out.

CESC Shares Gain 6% on Good Results and Stock Split

Jun 17, 2021

CESC share price hits fresh 52-week high on the BSE today.

Sensex 40,000: Your Chance to Profit

May 31, 2016

Why we believe the Sensex will touch 40,000 and what you need to do if you want to benefit from this stock market wave.


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