NEW DELHI: Last week, shares of Bajaj Finserv surged 10 per cent to Rs 14,579.95 on the BSE after the company’s board approved 1:1 bonus issue and 1:5 stock split, while shares of Tata Steel surged 7.42 percent a day after the company executed a 1:10 stock split.
An investor holding a single share of Bajaj Finserv will now hold 5 shares after the stock split while Tata Steel investors would hold ten shares after the stock split.
But what exactly is a stock split and why is it done?
In layman terms, Stock Split as the name suggests means splitting the face value of the shares of a company. Primarily, a company splits its stocks to improve its liquidity in the markets and to make its stock seem more affordable to retail investors. Stock splits don’t actually change the value of one’s stock holdings, but multiply one’s shares and divide the share price.
