Upcoming Stock Splits
| Company Name | Old FV | New FV | Ex-Dividend Date | Record Date |
|---|---|---|---|---|
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Stock Split Ratio – Meaning & Examples
| Split Ratio | What it Means | Example |
|---|---|---|
| 10 : 1 | Each 1 share you own becomes 10 shares after the split | If you hold 100 shares → you will have 1,000 shares after the split |
| 5 : 1 | Each 1 share becomes 5 shares after the split | If you hold 200 shares → you will have 1,000 shares after the split |
| 2 : 1 | Each 1 share becomes 2 shares after the split | If you hold 500 shares → you will have 1,000 shares after the split |
| 10 : 5 | Every 5 shares become 10 shares after the split | If you hold 100 shares → you will have 200 shares after the split |
| 5 : 2 | Every 2 shares become 5 shares after the split | If you hold 200 shares → you will have 500 shares after the split |
Note: A stock split does not change your total investment value. Only the number of shares increases and the share price decreases proportionately.
What is a Stock Split?
A stock split is a corporate action where a company divides its existing shares into multiple shares to increase liquidity. It means the number of shares increases, but the overall investment value remains the same.
For example:
- If a company announces a 1:5 stock split
- 1 share becomes 5 shares
- If the price was ₹1,000 before split
- It becomes approximately ₹200 after split
Your total investment value does NOT change immediately.
Why Do Companies Announce Stock Splits?
- Improve liquidity
- Make shares more affordable to retail investors
- Increase trading volume
- Improve market participation
Companies usually announce stock splits when the share price becomes very high.
How Stock Split Affects Shareholders
Let’s understand this clearly.
Suppose you hold 100 shares of a company priced at ₹1,000 each.
If the company announces a 1:5 split:
- Your 100 shares become 500 shares
- Share price adjusts to around ₹200
- Total investment value remains ₹1,00,000
There is no immediate gain or loss because of a split.
Does Stock Split Increase Profit?
Short answer: No.
A stock split does not increase company profits or your investment value instantly.
However, splits often:
- Increase liquidity
- Attract more retail investors
- Improve market sentiment
Sometimes stocks rally after split announcements due to positive sentiment.
Important Dates in Stock Split
- Announcement Date – When company declares the split
- Record Date – Date to determine eligible shareholders
- Ex-Date – Stock trades at adjusted price
If you want to be eligible, you must own shares before the ex-date.
Should You Buy Before Stock Split?
Many investors try to buy before a stock split expecting price rise.
But remember:
- Split itself does not create value
- Fundamentals matter more
- Check financial performance before investing
Never invest only because of split news.