What Is a Stock Split? Why Companies Split Their Shares

A stock split increases the number of shares a company has outstanding by dividing each existing share into several, while proportionally lowering the price of each. The total value of your holding doesn't change — you just hold more shares at a lower price.

How it works

In a 1:5 split (or "5-for-1"), one share becomes five. If you held 100 shares at ₹1,000 before, you hold 500 shares at ₹200 after — ₹100,000 of value either way. In India this is often described as a reduction in the face value (say from ₹10 to ₹2).

Why companies split

The main reason is liquidity and accessibility: a lower per-share price makes the stock easier for small investors to buy and can increase trading volume. A split is often read as a sign of management confidence, since companies usually split after a strong run-up.

The data impact: adjusted prices

Because a split changes the share price overnight without changing value, a raw price chart shows a misleading cliff on the split date. That's why price data includes a split-adjusted close — a continuous series that removes the artificial jump. See adjusted vs raw close for the detail.

Splits in the data

Splits are recorded as corporate actions; see corporate actions explained for how to fetch a company's split and bonus history.