By VestAI Research | Last updated: March 2026
Stock Split: Meaning, Definition & Indian Stock Market Examples
Dividing existing shares into multiple shares — reduces price per share, increases count.
What is Stock Split?
A stock split divides each existing share into multiple shares, reducing the price per share proportionally. A 10:1 split on a ₹10,000 share creates 10 shares at ₹1,000 each. Total market cap is unchanged. Splits improve affordability for retail investors and increase daily trading volume.
Stock Split — Indian Stock Market Example
MRF has famously never split its stock — its ₹1.2 lakh+ price makes it inaccessible to most retail investors, while Bajaj Finserv, Eicher Motors, and HDFC Life have split their stocks to improve retail participation. Page Industries went from ₹10 face value to ₹5 after a split. Splits are often positive sentiment signals from management.
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What is a reverse stock split?
A reverse split combines multiple shares into fewer shares, increasing the price per share. A 1:10 reverse split converts 10 shares at ₹2 into 1 share at ₹20. Companies do reverse splits to meet exchange listing requirements (minimum price thresholds) or to appear less speculative. In India, reverse splits are rare and often seen as a distress signal.
How does a stock split affect EPS and PE ratio?
After a split, EPS is adjusted proportionally (divided by the split ratio), and the price is also adjusted. PE ratio remains unchanged. Historical data on financial platforms is retroactively adjusted for splits. The split is a cosmetic change — underlying business fundamentals are completely unchanged.
Related Terms
Bonus Share
Free additional shares issued to existing shareholders from company reserves.
Face Value
The nominal value of a share set at issuance — typically ₹1, ₹2, or ₹10.
Earnings Per Share
Net profit divided by total shares — profit attributable to each share.
Market Capitalisation
Total shares × current price — the total market value of a company.
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