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Understand Stock Splits vs. Bonus Issues in India

Understand Stock Splits vs. Bonus Issues in India

Stock splits and bonus issues are important strategies in the Indian stock market used by companies to benefit their shareholders. A bonus issue gives existing shareholders free additional shares, showcasing the company’s strong finances and improving dividends. In contrast, a stock split divides existing shares into smaller units, lowering the price and making shares more affordable for new investors. While both methods increase the number of shares, they serve different purposes: bonus issues build investor trust, while stock splits enhance liquidity. Investors should understand these differences to make informed decisions about their portfolios.

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