Adani Power stock split explained; don't panic if scrip shows sharp fall today; here's why

Adani Power share price will turn ex-date for stock split in the ratio of 1:5 today, September 22. Within the group, Adani Ports underwent a split in September 2010, while Adani Enterprises completed one in July 2004.

After today’s stock split, each Adani Power share of face value Rs 10 will be divided into five fully paid-up shares of Rs 2 each, carrying equal rights. Theoretically, the Adani Power stock price, which closed at Rs 709.05 on Friday, would adjust to Rs 141.81, as investors will now hold five shares in place of one. Some stock trading platforms may not reflect Monday’s adjustment and could instead be comparing the adjusted price with Friday’s unadjusted level, thereby showing investors sharp notional losses.

Adani Power is the largest private thermal power producer in India. Promotes owned 74.96 per cent stake in the company at the end of June quarter. Foreign portfolio investors held 12.46 per cent stake in the Adani group firm as of June 30. 

Stock split vs bonus shares
A stock split are already owned shares that are split into smaller units (face value) to boost liquidity. In Adani Power's case of 1:5 stock split, each share will be divided into five, with the dividend entitlement shrinking proportionally. There would be no impact on share capital &
reserves.

Adani Power's 385,69,38,941 paid-up shares of face value 10 each would turn into 19,28,46,94,705 paid-up shares with face value of Rs 2. Its authorized shares of 2480,00,00,000 would turn 12400,00,00,000 shares with lower face value.

Stock split differs from bonus issue that rewards shareholders with free additional shares, funded out of accumulated earnings, while keeping the face value unchanged. In bonus issue the dividend entitlement remains unaffected.

Adani Power stock split: But Why?
From February 2023 low, Adani Power shares are up a solid 388 per cent. Adani Power said it wanted to encourage participation of retail investors as the split will make the shares more affordable to invest. Adani Power is the best performing Adani group stock since the Hindenburg case. The stock was in news last week after SEBI dismissed Hindenburg Research allegations against the Adani group.