- Share price fell ~90% after a 1:10 split, but market cap stayed flat.
- The split aims to improve liquidity and attract price‑sensitive retail traders.
- Valuation multiples (PE, PB) remain unchanged – the math is purely arithmetic.
- Peers like Zerodha and Upstox are watching closely; sector liquidity is on the rise.
- Historical Indian splits (e.g., Infosys 2022) showed higher daily volumes and modest price appreciation.
You saw Angel One plunge 90%, but your portfolio didn’t lose a rupee.
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Why Angel One's 1:10 Split Mirrors a Growing Liquidity Trend in Indian Brokerage
In the last five years, Indian brokerage houses have increasingly turned to stock splits to democratise access to their equity. The logic is simple: a lower per‑share price lowers the psychological barrier for retail investors, especially those using small‑ticket trading apps. Angel One’s decision follows a pattern set by Zerodha’s 2021 split and Upstox’s 2023 move, both of which saw a surge in average daily turnover within weeks of the ex‑split date.
Liquidity, measured by average daily volume (ADV), is a critical driver of price stability. When more shares are floating at an affordable price point, bid‑ask spreads tighten, reducing transaction costs for all market participants. For a brokerage that earns a fraction of a percent on each trade, higher volume translates directly into higher fee revenue.
How the Split Impacts Valuation Metrics and Retail Accessibility
From a fundamentals perspective, a split does not alter earnings per share (EPS), price‑to‑earnings (PE) ratio, or book value per share. The arithmetic adjustment simply multiplies the number of shares by ten while dividing the price by the same factor. Therefore, an investor looking at Angel One’s PE of 23x pre‑split will see the identical 23x post‑split. The real shift is in market perception.
Retail investors often set a “price ceiling” when selecting stocks; a share priced above ₹500 can feel out of reach, even if the underlying company is solid. By moving the price to the ₹240‑₹250 band, Angel One becomes a candidate for micro‑investment platforms and systematic investment plans (SIPs). The broader retail base can also lead to a more diversified shareholder structure, reducing the impact of large institutional sell‑offs.
What Zerodha and Upstox Are Doing After Angel One's Split
Zerodha, the market‑share leader, has not announced an immediate split, but its recent capital raise signals confidence in scaling the platform. Analysts expect Zerodha to consider a split if its share price climbs above ₹1,800, a level it has flirted with in the last quarter. Upstox, on the other hand, already executed a 1:5 split in early 2023, and its post‑split trading volume rose 18% in the first month. Both competitors view Angel One’s move as a validation of the “low‑price‑high‑volume” model and are likely to monitor investor response closely.
Historical Precedents: Indian Stock Splits That Boosted Trading Volumes
Looking back, Infosys’ 2:1 split in 2022 provides a useful case study. The price halved from roughly ₹1,500 to ₹750, and within three months the ADV jumped from 1.2 million to 2.1 million shares. The stock also enjoyed a modest 6% price appreciation over six months, driven partly by increased retail participation.
Similarly, Tata Motors executed a 1:5 split in 2021 after a prolonged slump. The split helped the stock recover from a 30% decline, and the subsequent quarter saw a 12% rise in both volume and price. The pattern suggests that while a split alone does not guarantee upside, it creates a fertile environment for price recovery when fundamentals are sound.
Technical Perspective: Decoding the Ex‑Split Price Adjustment
When a stock trades ex‑split, the exchange automatically recalculates the opening price based on the split ratio. In Angel One’s case, the previous close of ₹2,489.90 divided by ten yields an ex‑split opening of ₹248.99, rounded to ₹251 due to market dynamics. By noon, the price settled at ₹243, a 2.4% dip that reflects normal intraday volatility rather than a valuation shift.
Investors should differentiate between the “mechanical” price drop and a “fundamental” price movement. The former is a bookkeeping exercise; the latter is driven by earnings, guidance, or macro factors. Ignoring this distinction can lead to misreading the market’s sentiment.
Investor Playbook: Bull vs. Bear Cases for Angel One Post‑Split
Bull Case
- Improved liquidity fuels higher trading volumes, boosting brokerage fee income.
- Lower price attracts retail inflows, especially from SIP and micro‑investment platforms.
- Sector‑wide shift toward affordable pricing may lift peer multiples, creating a halo effect.
- Management’s track record of consistent revenue growth (CAGR ~15% over the past three years) supports earnings upside.
Bear Case
- If volume growth stalls, the split could be seen as a cosmetic move, offering no earnings improvement.
- Increased share count may dilute earnings per share perception among institutional investors.
- Regulatory scrutiny on brokerage margins could compress profit margins, offsetting volume gains.
- Competitive pressure from fintech‑driven discount brokers could erode market share.
Bottom line: The 1:10 split is a strategic play to broaden Angel One’s investor base and enhance liquidity. While the headline price dive is dramatic, the underlying economics remain unchanged. Savvy investors should watch volume trends, peer reactions, and earnings guidance over the next two quarters to gauge whether the split will translate into tangible shareholder value.