A stock split is when a company increases the number of its outstanding shares by issuing more shares to existing shareholders, without changing the total value of their holdings.
It’s like cutting a pizza into more slices — you have more pieces, but the total pizza size hasn’t changed.
Example:
Suppose you own 100 shares of a company at ₹1,000 each.
The company announces a 2-for-1 split.
After the split, you’ll have 200 shares, but each will be worth ₹500.
The total value (₹1,00,000) remains the same on the split date.
1. Make shares more affordable for smaller investors.
2. Increase liquidity (more shares available for trading).
3. Improve market perception if the share price has risen too high.
There’s also the opposite — a reverse stock split — where a company reduces the number of shares, usually to raise the per-share price.
After a stock split, the total value of your investment stays exactly the same — only the number of shares you own and the price per share change.
Think of it like exchanging a ₹500 note for five ₹100 notes: the number of notes increases, but your total money remains unchanged.
Example:
Before split: You own 100 shares at ₹1,000 each → Total value = ₹1,00,000.
2-for-1 split: You now have 200 shares at ₹500 each → Total value = ₹1,00,000.
Eligibility for split shares is based on the record date set by the company.
Here’s how it works:
Record Date
The company announces a specific date — called the record date — when it will check its shareholder list.
If your name is on the company’s books as a shareholder on that date, you are eligible to receive the additional shares from the split.
Ex-Split Date (similar to ex-dividend date)
Usually set 1 business day before the record date in markets that follow T+1 settlement (like India).
You must buy the shares before the ex-split date so that the purchase is settled and your name appears in the company’s records by the record date.
Split shares are usually credited to your demat account on or just before the split execution (payment) date announced by the company. Generally happens 1–2 business days after the record date. In most cases, the extra shares appear in your demat account by the payment date mentioned in the corporate action notice.
Yes — once the split shares are credited to your demat account and trading in the stock has resumed with the adjusted price, you can sell them immediately.
The share price is reduced after a stock split to keep the total value of your investment the same while increasing the number of shares.
It’s purely a mathematical adjustment.
You can find out if a company is doing a stock split by checking official announcements on the NSE or BSE corporate actions pages, the company’s Investor Relations section, or press releases filed with the exchanges. Your brokerage or trading app will usually notify you if you hold the stock.
No, you don’t need to apply or make any special request for split shares.
If you are a shareholder on the record date announced by the company, the additional shares from the split are automatically credited to your demat account by your depository (NSDL/CDSL) on or before the payment date. The entire process is handled by the company’s registrar and transfer agent (RTA) along with the stock exchanges, so you just need to hold the shares before the ex-split date to be eligible.
In India, a stock split is not taxable at the time it happens, because it’s not considered income — you’re just holding more shares of the same total value. However, Capital Gains Tax will apply when you sell the shares in the future.
