{"id":25654563,"date":"2026-07-21T19:00:17","date_gmt":"2026-07-21T13:30:17","guid":{"rendered":"https:\/\/entri.app\/blog\/?p=25654563"},"modified":"2026-07-21T19:02:23","modified_gmt":"2026-07-21T13:32:23","slug":"what-is-stock-split","status":"publish","type":"post","link":"https:\/\/entri.app\/blog\/what-is-stock-split\/","title":{"rendered":"What is Stock Split, Why Companies Do it and How it Works?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_79_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a5fcf100285f\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a5fcf100285f\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/entri.app\/blog\/what-is-stock-split\/#Key_Takeaways\" >Key Takeaways<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/entri.app\/blog\/what-is-stock-split\/#Introduction\" >Introduction<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/entri.app\/blog\/what-is-stock-split\/#What_is_Stock_Split_and_How_does_it_Work\" >What is Stock Split and How does it Work?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/entri.app\/blog\/what-is-stock-split\/#Top_4_Reasons_Companies_Split_their_Stocks\" >Top 4 Reasons Companies Split their Stocks<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/entri.app\/blog\/what-is-stock-split\/#Types_of_Stock_Splits_Forward_vs_Reverse\" >Types of Stock Splits: Forward vs. Reverse<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/entri.app\/blog\/what-is-stock-split\/#Stock_Split_vs_Bonus_Shares_Key_Differences\" >Stock Split vs. Bonus Shares: Key Differences<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/entri.app\/blog\/what-is-stock-split\/#Impact_on_Face_Value_and_Market_Capitalization\" >Impact on Face Value and Market Capitalization<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/entri.app\/blog\/what-is-stock-split\/#Tax_Implications_and_Portfolio_Impact_for_Indian_Investors\" >Tax Implications and Portfolio Impact for Indian Investors<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/entri.app\/blog\/what-is-stock-split\/#Real_Examples_of_Stock_Splits_in_India\" >Real Examples of Stock Splits in India<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/entri.app\/blog\/what-is-stock-split\/#Important_Dates_%E2%80%93_Keep_in_Mind\" >Important Dates &#8211; Keep in Mind<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/entri.app\/blog\/what-is-stock-split\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<p>In simple terms, a stock split is a corporate decision to divide existing shares into multiple new shares. Imagine that you are holding a \u20b9100 note and you exchange that single note for two \u20b950 notes.<\/p>\n<p>Now your total cash value remains \u20b9100. However, you now hold two notes instead of one. A stock split operates on the exact same logic.<\/p>\n<p style=\"text-align: center;\"><a href=\"https:\/\/entri.app\/course\/stock-market-course\/\" target=\"_blank\" rel=\"noopener\"><strong>Start investing like a pro. Enroll in our Stock Market course!<\/strong><\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Key_Takeaways\"><\/span><strong>Key Takeaways<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li>A stock split increases the total number of outstanding shares of a company while reducing the price of each share in proportion to that.<\/li>\n<li>The total market capitalization of the company and the net monetary value of your investment will remain unchanged.<\/li>\n<li>Companies split their shares primarily to make them affordable for retail investors and to boost trading liquidity in the stock market.<\/li>\n<li>Unlike bonus shares, a stock split directly reduces the face value of the stock.<\/li>\n<li>There are no capital gains tax implications in India at the time a stock split takes place.<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Introduction\"><\/span><strong>Introduction<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Assume that you are watching a high-priced stock on the National Stock Exchange (NSE) or Bombay Stock Exchange (BSE). Due to its high price, you might back out from buying it. High share prices often act as a psychological barrier for small retail investors in India.<\/p>\n<p>In situations where a single share costs thousands of rupees, buying even a small quantity requires a huge amount of capital. To solve this problem, very often publicly listed companies use a strategic financial tool known as a stock split. If you are just beginning your journey in the stock market, it\u2019s quite natural that you might wonder: <strong>what is stock split<\/strong>?<\/p>\n<p>In this comprehensive guide, we will break down <strong>what is stock split<\/strong>, why management teams approve it, how the mathematics behind it works, and how it impacts your Demat account as an Indian investor.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_Stock_Split_and_How_does_it_Work\"><\/span><strong>What is Stock Split and How does it Work?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-25654565 \" src=\"https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/07\/8851342_4012581-scaled.webp\" alt=\"Stock Splits\" width=\"501\" height=\"334\" srcset=\"https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/07\/8851342_4012581-scaled.webp 2560w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/07\/8851342_4012581-300x200.webp 300w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/07\/8851342_4012581-1024x683.webp 1024w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/07\/8851342_4012581-768x512.webp 768w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/07\/8851342_4012581-1536x1024.webp 1536w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/07\/8851342_4012581-2048x1365.webp 2048w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/07\/8851342_4012581-150x100.webp 150w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/07\/8851342_4012581-750x500.webp 750w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/07\/8851342_4012581-1140x760.webp 1140w\" sizes=\"auto, (max-width: 501px) 100vw, 501px\" \/><\/p>\n<p>To understand <strong>what stock split is<\/strong> at a fundamental level, we must look at how equity ownership is structured. When a company listed on the stock market decides to split its shares, it distributes additional shares to existing shareholders.<\/p>\n<p>This is done based on a predetermined ratio.The most common stock split ratios in India are <strong>1:2<\/strong>, <strong>1:5<\/strong>, and <strong>1:10<\/strong>.<\/p>\n<h3><strong>The Two Scenarios<\/strong><\/h3>\n<p>Let us consider a step-by-step example using an imaginary Indian company named Alpha Tech Limited.<\/p>\n<ul>\n<li>\n<h4><strong>Pre-Split Scenario:<\/strong><\/h4>\n<\/li>\n<\/ul>\n<ul>\n<li>\n<ul>\n<li>You own <strong>10 shares<\/strong> of Alpha Tech Limited.<\/li>\n<li>The current market price is <strong>\u20b92,000<\/strong> per share.<\/li>\n<li>Your total portfolio value in Alpha Tech is <strong>\u20b920,000<\/strong> (10 shares \u00d7 \u20b92,000).<\/li>\n<li>The face value of each share is <strong>\u20b910<\/strong>.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>Now, suppose Alpha Tech announces a <strong>1:2 stock split<\/strong>. It is often called a 2-for-1 split.<\/p>\n<ul>\n<li>\n<h4><strong>Post-Split Scenario:<\/strong><\/h4>\n<\/li>\n<\/ul>\n<ul>\n<li>\n<ul>\n<li>Your share count doubles from 10 to <strong>20 shares<\/strong>.<\/li>\n<li>The price per share drops by half, from \u20b92,000 to <strong>\u20b91,000<\/strong>.<\/li>\n<li>Your total portfolio value remains <strong>\u20b920,000<\/strong> (20 shares \u00d7 \u20b91,000).<\/li>\n<li>The face value of each share is reduced from \u20b910 to <strong>\u20b95<\/strong>.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>As you can see, your overall wealth did not increase or decrease instantly. So, <strong>what is the stock split<\/strong> achieving here?<\/p>\n<p>It alters the structure of ownership by multiplying the quantity of shares while scaling down the price per share proportionally.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Top_4_Reasons_Companies_Split_their_Stocks\"><\/span><strong>Top 4 Reasons Companies Split their Stocks<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-25654566 \" src=\"https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/07\/4731.webp\" alt=\"Stock Splits\" width=\"452\" height=\"301\" srcset=\"https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/07\/4731.webp 1500w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/07\/4731-300x200.webp 300w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/07\/4731-1024x683.webp 1024w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/07\/4731-768x512.webp 768w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/07\/4731-150x100.webp 150w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/07\/4731-750x500.webp 750w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/07\/4731-1140x760.webp 1140w\" sizes=\"auto, (max-width: 452px) 100vw, 452px\" \/><\/p>\n<p>If a stock split does not increase the underlying market value of a company, why do corporate boards spend time and resources executing it? Indian companies choose to split their stocks for several clear strategic advantages:<\/p>\n<h3><strong>1. Enhancing Retail Affordability<\/strong><\/h3>\n<p>When a company performs exceptionally well over several years, its share price rises steadily. If the price reaches \u20b95,000 or \u20b910,000, buying a meaningful lot becomes difficult for salaried individuals and small traders.<\/p>\n<p>By splitting the stock, the board brings the per-share price down to an accessible range, such as \u20b9500 or \u20b91,000. This encourages smaller investors to participate.<\/p>\n<h3><strong>2. Boosting Market Liquidity<\/strong><\/h3>\n<p>Liquidity refers to how easily you can buy or sell a stock in the open market without causing dramatic price swings. High-priced shares often suffer from lower daily trading volumes. This is because fewer people trade them.<\/p>\n<p>When a stock split lowers the share price, daily trading activity increases. Higher liquidity ensures smooth order execution for both retail and institutional investors.<\/p>\n<h3><strong>3. Broadening the Shareholder Base<\/strong><\/h3>\n<p>A diverse investor base is healthy for any listed enterprise. When share prices become affordable, thousands of new retail investors buy in. A broader shareholder base distributes risk and creates a stable foundation of long-term retail backing for the firm.<\/p>\n<h3><strong>4. Positive Market Sentiment<\/strong><\/h3>\n<p>In practice, companies rarely split shares when business performance is weak. A stock split usually follows a strong bull run in the stock\u2019s history. As a result, the announcement of a split sends a strong positive signal to the market. It indicates that management is confident about future earnings and expects growth to continue.<\/p>\n<div class=\"lead-gen-block\"><a href=\"https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/04\/Program-in-Indian-Stock-Market-and-Forex-Trading-1-compressed.pdf\" data-url=\"https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/04\/Program-in-Indian-Stock-Market-and-Forex-Trading-1-compressed.pdf\" class=\"lead-pdf-download\" data-id=\"25556854\">\n<p style=\"text-align: center;\"><button class=\"btn btn-default\">free download Stock market course roadmap<\/button><\/p>\n<\/a><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Types_of_Stock_Splits_Forward_vs_Reverse\"><\/span><strong>Types of Stock Splits: Forward vs. Reverse<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Stock splits generally fall into two distinct categories depending on corporate objectives:<\/p>\n<h3><strong>1. Forward Stock Split<\/strong><\/h3>\n<p>This is the standard form of stock split discussed throughout this article. In a forward split, the company increases the share count and decreases the price per share.<\/p>\n<ul>\n<li><strong>Example ratios:<\/strong> 1:2, 1:5, or 1:10.<\/li>\n<li><strong>Goal:<\/strong> Make shares cheaper and more liquid.<\/li>\n<\/ul>\n<h3><strong>2. Reverse Stock Split<\/strong><\/h3>\n<p>A reverse stock split works in the exact opposite direction. The company reduces the total number of outstanding shares to artificially increase the market price per share.<\/p>\n<ul>\n<li><strong>Example ratio:<\/strong> 5:1 (every 5 shares are merged into 1 share).<\/li>\n<li><strong>Goal:<\/strong> Elevate a falling stock price. Companies often do this if their stock drops into penny stock territory or faces the threat of exchange delisting due to minimum price requirements.<\/li>\n<\/ul>\n<p>While forward splits are very common among growing Indian enterprises, reverse splits are relatively rare and usually point to underlying financial distress.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Stock_Split_vs_Bonus_Shares_Key_Differences\"><\/span><strong>Stock Split vs. Bonus Shares: Key Differences<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Indian retail investors frequently mix up stock splits and bonus issues because both result in additional shares landing in your Demat account. However, their accounting mechanisms are completely different.The table below highlights the primary differences:<\/p>\n<table>\n<tbody>\n<tr>\n<td><strong>Parameter<\/strong><\/td>\n<td><strong>Stock Split<\/strong><\/td>\n<td><strong>Bonus Issue<\/strong><\/td>\n<\/tr>\n<tr>\n<td><strong>Basic Definition<\/strong><\/td>\n<td>Existing shares are sub-divided into smaller face-value units.<\/td>\n<td>Free extra shares are issued to current shareholders as a reward.<\/td>\n<\/tr>\n<tr>\n<td><strong>Face Value<\/strong><\/td>\n<td>The face value of the share decreases proportionally.<\/td>\n<td>The face value of the share remains unchanged.<\/td>\n<\/tr>\n<tr>\n<td><strong>Company Reserves<\/strong><\/td>\n<td>No utilization of accumulated company reserves.<\/td>\n<td>Free reserves or capital reserves are capitalized into share capital.<\/td>\n<\/tr>\n<tr>\n<td><strong>Adjusted Stock Price<\/strong><\/td>\n<td>Price drops strictly in proportion to the split ratio.<\/td>\n<td>Price drops in proportion to the bonus ratio.<\/td>\n<\/tr>\n<tr>\n<td><strong>Total Share Capital<\/strong><\/td>\n<td>Total authorized and paid-up capital stays identical.<\/td>\n<td>Paid-up share capital increases while cash reserves decrease.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span class=\"ez-toc-section\" id=\"Impact_on_Face_Value_and_Market_Capitalization\"><\/span><strong>Impact on Face Value and Market Capitalization<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-25654567 \" src=\"https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/07\/1576-e1784640424284.webp\" alt=\"Stock Splits\" width=\"400\" height=\"381\" srcset=\"https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/07\/1576-e1784640424284.webp 1500w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/07\/1576-e1784640424284-300x286.webp 300w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/07\/1576-e1784640424284-1024x975.webp 1024w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/07\/1576-e1784640424284-768x731.webp 768w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/07\/1576-e1784640424284-24x24.webp 24w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/07\/1576-e1784640424284-150x143.webp 150w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/07\/1576-e1784640424284-750x714.webp 750w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/07\/1576-e1784640424284-1140x1085.webp 1140w\" sizes=\"auto, (max-width: 400px) 100vw, 400px\" \/><\/p>\n<p>To evaluate corporate actions correctly, you must understand two key financial metrics:<\/p>\n<h3><strong>1. Face Value<\/strong><\/h3>\n<p>Face value is the nominal value assigned to a share by the company when issuing equity. In India, equity shares typically start with a face value of \u20b910. When a 1:10 stock split occurs, the face value drops from \u20b910 to \u20b91.<\/p>\n<p>The face value is important because corporate dividends in India are often declared as a percentage of the face value, not the market price.<\/p>\n<h3><strong>2. Market Capitalization<\/strong><\/h3>\n<p>Now let\u2019s check how market capitalization is calculated. This is done by multiplying the total number of outstanding shares by the current market price per share.<\/p>\n<h5>Market Capitalization = Total Shares * Market Price Per Share<\/h5>\n<p>Because the share count increases by the exact same factor that the price decreases, the product of these two numbers remains identical. Therefore, a stock split has zero direct impact on a company&#8217;s market cap or its intrinsic business valuation.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Tax_Implications_and_Portfolio_Impact_for_Indian_Investors\"><\/span><strong>Tax Implications and Portfolio Impact for Indian Investors<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Understanding the tax laws surrounding corporate actions is essential for managing your personal finances in India.<\/p>\n<h3><strong>Capital Gains Tax<\/strong><\/h3>\n<p>Under the Indian Income Tax Act, a stock split is not classified as a transfer or sale of assets. With no money changing hands and no capital gain realized, <strong>no income tax or capital gains tax is triggered<\/strong> on the day of the split.<\/p>\n<h3><strong>Cost of Acquisition<\/strong><\/h3>\n<p>When a split occurs, your total cost of purchasing the original shares is spread evenly across the new, higher quantity of shares.<\/p>\n<h5><strong>Calculation:<\/strong><\/h5>\n<p>If you originally purchased 1 share for \u20b910,000 and the stock undergoes a 1:5 split, you now hold 5 shares. Your adjusted cost of acquisition becomes:<\/p>\n<p>\u20b910,000\/5 = \u20b92,000 per share<\/p>\n<h3><strong>Period of Holding<\/strong><\/h3>\n<p>For long-term or short-term capital gains tax calculations upon future sales, the holding period for the newly received split shares dates back to the original day you purchased the initial shares.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Real_Examples_of_Stock_Splits_in_India\"><\/span><strong>Real Examples of Stock Splits in India<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Several prominent blue-chip companies in India have successfully used stock splits to increase accessibility:<\/p>\n<ul>\n<li>\n<h5><strong>Tata Steel (2022): <\/strong><\/h5>\n<\/li>\n<\/ul>\n<p style=\"padding-left: 40px;\">In 2022, Tata Steel announced a 10-for-1 (1:10) stock split. The face value was reduced from \u20b910 to \u20b91 per share. This adjusted the stock price down from nearly \u20b9960 to around \u20b996 per share, inviting massive retail participation across Indian brokerages.<\/p>\n<ul>\n<li>\n<h5><strong>IRCTC (2021):<\/strong><\/h5>\n<\/li>\n<\/ul>\n<p style=\"padding-left: 40px;\">The Indian Railway Catering and Tourism Corporation executed a 1:5 stock split in October 2021. The face value changed from \u20b910 to \u20b92. As a result, the trading price went down from over \u20b94,000 to around \u20b9800.<\/p>\n<ul>\n<li>\n<h5><strong>Eicher Motors (2020):<\/strong><\/h5>\n<\/li>\n<\/ul>\n<p style=\"padding-left: 40px;\">Known for manufacturing Royal Enfield motorcycles, the company split its shares in a 1:10 ratio in 2020. The face value reduced from \u20b910 to \u20b91, reducing the per-share price from approximately \u20b921,000 to \u20b92,100.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Important_Dates_%E2%80%93_Keep_in_Mind\"><\/span><strong>Important Dates &#8211; Keep in Mind<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>When a company announces a stock split, keep track of three crucial dates:<\/p>\n<ol>\n<li><strong>Announcement Date:<\/strong> The day the company\u2019s Board of Directors approves the proposal and informs stock exchanges.<\/li>\n<li><strong>Record Date:<\/strong> The cutoff date set by the firm to identify eligible shareholders listed in its records. You must own the shares before this date to receive split benefits.<\/li>\n<li><strong>Ex-Split Date:<\/strong> The day from which the stock begins trading at the new, lower adjusted price on the exchanges. In Indian markets, the ex-split date is typically set on or one trading day before the record date.<\/li>\n<\/ol>\n<p style=\"text-align: center;\"><a href=\"https:\/\/entri.app\/course\/stock-market-course\/\" target=\"_blank\" rel=\"noopener\"><strong>Join our Online Course and Learn Stock Marketing the Right Way. Enrol Now!<\/strong><\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><strong>Conclusion<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Understanding <strong>what stock split is helps<\/strong> you navigate stock market announcements without confusion. Purely a structural adjustment, a stock split divides existing shares into smaller units. It also lowers the per-share market price, and reduces face value with no altering of the underlying value of the company or your portfolio.<\/p>\n<p>When it comes to retail investors in India, a stock split is generally a positive development. The best part is that it enhances liquidity, improves price accessibility, and makes it easier to accumulate shares of high-quality businesses over time.<\/p>\n<p>Hence, whenever a company in your portfolio announces a split, be rest assured that your percentage ownership and long-term investment value remain fully intact.<\/p>\n<div class=\"alert alert-warning\"><strong>Disclaimer:<\/strong> The information provided in this article is for general informational purposes only and is not intended as investment advice, financial guidance, or an offer or solicitation to buy or sell any securities. Readers should conduct their own research or consult a qualified financial advisor before making any investment decisions. The author(s) and the publisher disclaim any liability for any loss or damage arising directly or indirectly from the use of or reliance on the information provided herein.<\/div>\n<div>\n<table>\n<tbody>\n<tr>\n<td colspan=\"2\">\n<p style=\"text-align: center;\"><b>RELATED POSTS<\/b><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: center;\"><a href=\"https:\/\/entri.app\/blog\/do-stock-market-investors-need-to-pay-tax\/\" target=\"_blank\" rel=\"noopener\"><b>Do Stock Market Investors Need to Pay Taxes?<\/b><\/a><b>\u00a0<\/b><\/td>\n<td>\n<p style=\"text-align: center;\"><a href=\"https:\/\/entri.app\/blog\/sebi-plans-to-nearly-double-stocks\/\" target=\"_blank\" rel=\"noopener\"><b>SEBI Plans to Nearly Double Stocks Eligible for Short Selling<\/b><\/a><b>\u00a0<\/b><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td>\n<p style=\"text-align: center;\"><a href=\"https:\/\/entri.app\/blog\/10-top-stock-exchanges-in-the-world-by-market-cap\/\" target=\"_blank\" rel=\"noopener\"><b>The 10 Top Stock 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class=\"wpcf7-form-control wpcf7-hidden course-name-input\" value=\"\" type=\"hidden\" name=\"course_name\" \/>\n<input class=\"wpcf7-form-control wpcf7-hidden utm-source\" value=\"\" type=\"hidden\" name=\"utm_source\" \/>\n<input class=\"wpcf7-form-control wpcf7-hidden utm-medium\" value=\"\" type=\"hidden\" name=\"utm_medium\" \/>\n<input class=\"wpcf7-form-control wpcf7-hidden utm-campaign\" value=\"\" type=\"hidden\" name=\"utm_campaign\" \/>\n<input class=\"wpcf7-form-control wpcf7-hidden utm-content\" value=\"\" type=\"hidden\" name=\"utm_content\" \/>\n<input class=\"wpcf7-form-control wpcf7-hidden utm-term\" value=\"\" type=\"hidden\" name=\"utm_term\" \/>\n<input class=\"wpcf7-form-control wpcf7-hidden blog-url\" value=\"\" type=\"hidden\" name=\"blog_url\" \/>\n<input class=\"wpcf7-form-control wpcf7-hidden post-category-name\" value=\"\" type=\"hidden\" name=\"post_category_name\" \/>\n<input class=\"wpcf7-form-control wpcf7-hidden post-author-name\" value=\"\" 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Imagine that you are holding a \u20b9100 note and you exchange that single note for two \u20b950 notes. Now your total cash value remains \u20b9100. However, you now hold two notes instead of one. A stock split [&hellip;]<\/p>\n","protected":false},"author":137,"featured_media":25654564,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[802,1867],"tags":[],"class_list":["post-25654563","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles","category-stock-marketing"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What is Stock Split, Why Companies Do it and How it Works?<\/title>\n<meta name=\"description\" content=\"Clueless about what stock split is? 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