Stock Splits in January 2023

A stock split occurs when a company splits its shares in a specified ratio to increase stock liquidity. The company may decide to split shares when it starts to look expensive. Stock split lowers the price per share. But it is also good news for investors. 

What is a stock split?

Companies split stocks when the stock price has risen to a point where it has become unattractive to most investors. Share Split increases the number of outstanding shares by specific multiples. However, it is helpful to understand that the total value of the outstanding share remains unchanged and split stocks don’t impact the company’s value.   

Companies can decide to split stocks in any multiple. However, 2-for-1 (or 2:1) or 3-for-1  (or 3:1) splits are most common. It means that the shareholders will have 2 or 3 shares for each share they had before the split. 

Suppose a company’s shares were trading at Rs 50 a year ago and it has now increased to Rs 100. If the company announces a stock split at 2:1 it will allot one additional share (quantity-wise) for each stock held by the investor. It doesn’t impact the holding size of the investor, but share prices come down to Rs 50 again.

A stock split doesn’t affect your shareholding pattern or percentage and the company’s total market capitalisation also remains unchanged. So, you might wonder, how the stock split is good news for you. 

It is exciting for any investor to know that the price of the stocks in their portfolio has increased enough to require a stock split. It indicates that the company is growing. Split stocks help lower the price level comfortably for most investors, encouraging more investor participation and subsequently price appreciation.

Investors aren’t better or worse off due to the splits. But they must understand the impact of share splits on outstanding market orders, dividend payouts, and capital gain tax. 

• If you are short-selling or trading options, your order size will automatically adjust to neutralise any impact on your investment. 
• Share split will not increase the total dividend payable. The company will only consider fully paid stocks before the record date for paying dividends. 
• Investors will now have to adjust their capital gain/loss basis to the new price of the share as it changes after the split.

As we have seen the effect of stock split, let’s find out which companies have announced stock splits in January 2023. Here is a list of companies with upcoming stock splits. 

List of Upcoming Stock Split in January 2023