Adani Power Ltd witnessed a sharp 19 per cent jump in its share price on Monday, coinciding with the ex-date for its stock split. When adjusted for the corporate action, the stock surged 18.82 per cent to touch a high of Rs 170 apiece on the BSE, around 11:52 AM.
On an unadjusted basis, the scrip opened at Rs 141.80 per share, reflecting an 80 per cent drop from Friday’s closing of Rs 709.05. This fall is purely due to the stock split, as each share with a face value of Rs 10 was divided into five shares with a reduced face value of Rs 2.
Understanding the Stock Split
A stock split divides existing shares into smaller units, lowering the face value to make them more accessible to retail investors without changing the overall share capital. In Adani Power’s case, the 1:5 split means shareholders now hold five shares for every one share previously owned. Dividend entitlements adjust proportionally, but the company’s capital and reserves remain unchanged.
The paid-up shares of Adani Power have increased from 385,69,38,941 shares of Rs 10 each to 19,28,46,94,705 shares of Rs 2 each, reported Business Today. Similarly, the authorised share capital has been recast 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 reward shareholders with additional free shares from accumulated earnings, a stock split merely reduces the face value to improve liquidity.
Market Context and Regulatory Clearance
Adani Power shares were already in focus after the Securities and Exchange Board of India (SEBI) dismissed allegations by Hindenburg Research concerning fund routing via Adicorp, Milestone, and Rehvar to manipulate Adani’s listed companies. SEBI concluded that related-party transactions were fully disclosed and compliant with regulations. The scrip had jumped 12.36 per cent on Friday following this regulatory clarity.
Boosting Retail Participation
The stock split aims to make Adani Power shares more affordable for retail investors, encouraging broader participation in the market. The stock has performed exceptionally well since February 2023, surging 388 per cent from its low, making it the top-performing Adani Group stock post-Hindenburg allegations.
With the stock split and regulatory clarity, Adani Power is poised for increased liquidity and greater retail participation, while analysts remain optimistic about its growth trajectory in the medium term.