Adani Power Rises 19% After Stock Split
On Monday, the share price of Adani Power Ltd. surged 18.82% to Rs 170 per share on the BSE at around 11:52 AM, following the company’s stock split. This came after an initial adjusted price of Rs 141.80 per share, reflecting an 80% decline from Friday’s closing price of Rs 709.05 due to the corporate action.
A stock split divides existing shares into smaller units without changing the company’s total capital, making the shares more accessible to retail investors. In Adani Power’s case, a 1:5 split means that for every share previously held, shareholders now own five shares. While the face value is reduced, the company’s capital and reserves remain unchanged, though dividend entitlements are adjusted accordingly.
Understanding the Stock Split
According to Business Today, Adani Power’s paid-up shares increased from 385,69,38,941 shares of Rs 10 each to 1,928,46,94,705 shares of Rs 2 each. Similarly, the authorized share capital changed from 2,480,00,00,000 shares of Rs 10 to 12,400,00,00,000 shares of Rs 2 each. Unlike bonus issues, which issue additional shares from accumulated earnings, a stock split only reduces the face value to improve liquidity.
Market Context and Regulatory Approval
Adani Power’s shares were already in focus following Hindenburg Research’s allegations regarding capital routing through related entities. However, the Securities and Exchange Board of India (SEBI) confirmed that related-party transactions were fully disclosed and compliant with regulations, leading to a 12.36% increase in the stock on Friday.
Boosting Retail Participation
The stock split is expected to encourage greater participation from retail investors by lowering the per-share price. Since February 2023, Adani Power has risen 388% from its low, making it the best-performing stock in the Adani Group following the Hindenburg allegations.
Analysts remain optimistic about Adani Power’s long-term growth, noting that the stock split and regulatory clarification are likely to enhance liquidity and attract more retail investors.
