Shares of Tata Investment Corporation Ltd opened at Rs 1,042 apiece on Tuesday, marking a nearly 90% drop from Monday’s closing price of Rs 9,922 on the NSE. This sharp fall surprised some investors but is entirely due to a stock split and not a decline in the company’s intrinsic value.

 

The company implemented a split reducing the face value of each share from Rs 10 to Re 1. In a stock split, existing shares are divided into a larger number of shares with smaller face values, primarily to enhance liquidity on the trading platform. Some trading apps may have displayed the pre-split price, creating the impression of a dramatic 90% fall. Adjusted for the split, the shares were trading at Rs 1,042 each.

 

Tata Sons holds a 68.51% stake in the company, while other major Tata Group shareholders—including Tata Power, Tata Chemicals, Tata Steel, Tata Consumer Products, and Trent—together own 73.38% of Tata Investment.

 

Following the split, the company’s authorised shares have increased from 6 crore shares of Rs 10 each to 60 crore shares of Re 1 each. Similarly, issued shares will rise from 5.06 crore shares of Rs 10 each to 50.60 crore shares of Re 1 each, with the subscribed and paid-up capital expanding proportionally.

 

It is important to note that a stock split is different from a bonus issue. While a split reduces the face value and increases the number of shares outstanding, the total value of each shareholder’s investment remains unchanged.