Fundamental Glossary / Shareholding & Ownership
Stock Split
A division of each share into more shares with a lower face value. The economic claim is unchanged.
Formula
A split from a face value of 10 to 2 is a 5-for-1 split. Share count rises fivefold. Price and per-share figures divide by five.
What it means
Unlike a bonus, a split does not capitalise reserves. It only changes the face value and the number of shares. The market cap and the owner's wealth are unchanged at the moment of the split.
The usual motive is a lower price per share so that smaller orders can trade.
How to read it
Adjust historical prices, EPS, and dividends. Compare the business with itself on a split-adjusted basis only.
What to watch
A split is not a fundamental improvement. Liquidity sometimes improves. The earning power does not.
This note explains the term. It is not a research recommendation, a target price, or a comment on any security. Ratios and regulatory thresholds change; use the latest filing or circular for a live figure.