Shares of Adani Power made headlines on September 22 after a sharp adjustment in price. At first glance, it looked like the stock had crashed nearly 80 percent in a single session. But the fall was only technical as the company’s shares went ex-split.
The stock actually gained ground. After adjusting for the split, Adani Power rose nearly 20 percent, hitting a fresh record high and locking in the upper circuit at Rs 170.25.
This followed a decision made in August when the company’s board approved a stock split in the ratio of 1:5. The record date to decide who qualified for the new shares was fixed as September 22.
The corporate action is aimed at making shares cheaper to buy, increasing liquidity, and drawing more retail investors into the stock.
What is Stock Split
A stock split happens when a company divides each of its shares into multiple shares. This lowers the price per share but does not change the company’s total market value.
For example, in a 1:5 stock split, one share becomes five shares. The face value of each share drops, but the total value of an investor’s holding remains unchanged.
Companies go for splits when their share prices become high, making them harder for new or small investors to afford. By cutting the price per share, the company creates room for more participation.
What it means for shareholders?
For investors, the stock split changes only the number of shares, not the total value. If you owned 10 shares at Rs 100 each, after a 1:5 split you would own 50 shares worth Rs 20 each. Your total holding would still be Rs 1,000.
The benefit is that the stock becomes more liquid and easier to trade. It also opens the door for more buyers, which can boost market activity.
Adani Power share price
After the adjustment, Adani Power shares looked like they had fallen 80 percent. In reality, they simply reflected the new split price. The stock then climbed 20 percent to Rs 170.25, setting a new 52-week high.
Brokerage firm Morgan Stanley called Adani Power its “top pick” and gave it an “overweight” rating. The firm said the company is an example of a turnaround in India’s corporate sector, with strong earnings expected from new projects and more power purchase agreements.
The rally also came after SEBI gave the Adani Group a partial clean chit over charges raised by short-seller Hindenburg Research. In the two sessions after the order, Adani Power’s stock jumped 35 percent, while other group companies like Adani Enterprises, Adani Energy Solutions, and Adani Green Energy also gained.
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