Adani Power hits 20% upper circuit post stock split: What it means, how shareholders benefit

Adani Power’s stock split

In August this year, Adani Power’s board approved a stock split of the existing one equity share of the company, having face value of Rs 10 each fully paid-up, into five equity shares having face value of Rs 2 each. The record date for the split of equity shares was September 22. This was the company’s first-ever stock split. A record date, or the cut-off date, is the specific day on which a company finalises the eligible shareholders for a corporate action.

What is a stock split?

Stock split refers to splitting or sub division of already owned shares into smaller quantities of shares. Companies undertake stock splits to improve liquidity, by breaking the existing stocks into smaller quantities and reducing the face value of the stock.

Impact on shareholders

For example, if a shareholder was holding 100 shares of Adani power at Rs 10 each, then after the split, they would own 500 shares priced at Rs 2 each. This means that even if the number of shares have increased post the stock split, the total value of the shares continue to remain the same.