What Is a Stock Split?

A stock split divides each existing share into multiple shares, reducing the price per share proportionally. Crucially, it does not change the total value of your holding or the company’s market capitalisation — only the number of pieces it’s divided into.

How it works

In a 1:5 split, one share priced at ₹1,000 (with a ₹10 face value) becomes five shares of ₹200 each (face value ₹2). You now own five shares instead of one, but your total investment value is unchanged. The face value falls in the same ratio.

Why companies split

• Affordability/perception — a lower price per share can feel more accessible to retail investors.
• Liquidity — more shares outstanding can improve trading liquidity.

Stock split vs bonus issue

Both increase share count and lower the price, but:

• A stock split reduces the face value (₹10 → ₹2).
• A bonus issue keeps the face value the same and issues free extra shares from reserves.

See bonus shares vs stock split for the full comparison.

What it means for you

A split is cosmetic — it doesn’t create or destroy value, and it’s not a reason by itself to buy. What matters is the underlying business. Education only, not a recommendation.