Calculate reverse stock split effects with ratios like 1:2, 1:5, 1:10. Understand share reduction, price increase, and fractional share handling.
Total shares you currently own before consolidation
Market price before consolidation announcement
Ratio format - 1:10 means 10 old shares become 1 new share
Number of Shares
1,000
Price per Share
₹10.00
Total Portfolio Value
₹10,000.00
Number of Shares
100
-90.0% shares
Price per Share
₹100.00
+900.0% price
Total Portfolio Value
₹10,000.00
Shares Reduced
-900
(90.00% decrease in quantity)
Price Increased
+₹90.00
(900.00% increase in price)
Your portfolio value remains unchanged at ₹10,000.00. Stock consolidation is a neutral event - you own fewer shares at a proportionally higher price. The company's market cap and your ownership percentage stay the same.
• Ratio Meaning: Every 10 old shares you own become 1 new share
• Share Count: Reduced from 1,000 to 100(90.0% reduction)
• Price Adjustment: Increased from ₹10.00 to ₹100.00(900.0% increase)
• Ownership %: Your percentage ownership in company remains unchanged
• Market Cap: Company's total market capitalization stays the same
Important: Stock consolidation (reverse split) is a neutral event that does not change your portfolio value. However, companies often do this when stock price has fallen significantly. Research company fundamentals carefully. Fractional shares are typically paid as cash. This calculator provides estimates - actual outcomes may vary. Not financial advice.
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A Stock Consolidation Calculator (also called Reverse Stock Split Calculator) helps you calculate the effect of share consolidation on your portfolio. Stock consolidation is when a company reduces the number of outstanding shares by combining multiple old shares into fewer new shares at higher prices. Common ratios include 1:2 (2 old shares become 1 new), 1:5 (5→1), or 1:10 (10→1). Companies do this to increase stock price when it falls too low (avoid delisting from exchanges that require minimum price), improve market perception (penny stocks appear more valuable), attract institutional investors (many funds have minimum price requirements), or reduce shareholder count. While share count decreases and price increases proportionally, your total portfolio value remains unchanged - it's just arithmetic reorganization. This calculator shows new share count, new price, fractional share handling, and portfolio value before/after consolidation for Indian stocks on NSE/BSE.
Stock Split (Regular): Increases shares, decreases price. Example: 1:2 split means 1 share becomes 2, price halves. Used when stock price is too high (₹5,000 → ₹2,500 for better retail participation). Stock Consolidation (Reverse Split): Decreases shares, increases price. Example: 1:10 consolidation means 10 shares become 1, price multiplies 10x. Used when stock price is too low (₹8 → ₹80 to avoid delisting). Both are VALUE NEUTRAL - your portfolio worth stays same. Example: Own 100 shares @ ₹1,000 = ₹1,00,000. After 1:5 consolidation: 20 shares @ ₹5,000 = ₹1,00,000. Same wealth, different numbers. Key difference: Regular splits are positive signals (company doing well), consolidations often signal distress (stock has fallen significantly).
Common reasons: (1) Avoid delisting - NSE requires ₹10 minimum price for months, below that risks delisting, (2) Improve perception - ₹5 stock looks 'cheap', ₹50 after consolidation looks 'respectable', (3) Attract institutional investors - many mutual funds/FIIs have minimum ₹25-50 price policies, (4) Reduce shareholder count - if shareholders <100, can delist from exchange (expensive), (5) Options eligibility - some derivatives need minimum price. Is it red flag? Usually YES because: Stock fell significantly (that's why price is low), Fundamentals likely weak, Historical data: 50-60% of stocks doing reverse splits continue declining post-consolidation, Management admission that stock performance is poor. However, not ALWAYS bad: Sometimes done pre-merger for ratio alignment, PSU banks did it for cleanup (not distress). Bottom line: Investigate WHY consolidation is needed. If due to business failure, it's red flag. If due to technical reasons, may be neutral.
Fractional shares are handled in two ways in India: (1) Cash Settlement (Most Common): Company pays you cash equivalent for fractional share at post-consolidation market price. Example: You own 127 shares, 1:10 consolidation = 12.7 shares. You receive: 12 whole shares + Cash for 0.7 share. If new price is ₹100, you get ₹70 cash. (2) Rounded Down: Sometimes fractions simply discarded if very small (<0.01 share). Rare but possible. Tax Implications: Cash received for fractional share is treated as capital gain (sold your fractional holding). Calculate: Cost of 0.7 original shares vs ₹70 received. If held >1 year = LTCG (10% tax above ₹1L), if <1 year = STCG (15%). Practical Impact: If you own small quantity (50-100 shares) in heavily consolidated stock (1:10), you may get mostly cash, very few shares. Plan accordingly.
Direct Impact: NO, consolidation itself is not a taxable event. It's just reorganization, no sale occurred. Cost Basis Adjustment: Your purchase price is adjusted proportionally. Example: Bought 1,000 shares @ ₹10 = ₹10 cost each. After 1:10 consolidation: Now 100 shares, cost becomes ₹100 each (10 × ₹10). Total cost still ₹10,000. When you SELL: Calculate gain using adjusted cost basis. If you sell @ ₹120: Gain = ₹120 - ₹100 = ₹20 per share × 100 = ₹2,000 total gain. Holding Period: Starts from ORIGINAL purchase date, not consolidation date. If you bought in 2020, consolidated in 2024, sold in 2025 = LTCG (>1 year holding), NOT STCG. Fractional Share Cash: Only the cash received for fractional share is taxable as capital gain immediately. Rest of consolidated shares carry forward with adjusted cost basis until you sell.
Economically: Makes NO difference. Before consolidation: Buy 100 shares @ ₹10 = ₹1,000 → becomes 10 shares @ ₹100. After consolidation: Buy 10 shares @ ₹100 = ₹1,000 directly. Same result. However, practical considerations: BEFORE consolidation advantages: (1) Lower price = easier to buy small amounts, (2) More shares = better flexibility in selling later, (3) No ambiguity about fractional shares. AFTER consolidation advantages: (1) Dust settles, see actual market reaction, (2) Clearer picture if stock stabilizes at new price, (3) Avoid risk of cancellation if you're unsure about fundamentals. Reality check: If company is doing reverse split due to poor performance, ask yourself: Why buy at all? Consolidation doesn't fix underlying business problems. Stock at ₹10 before consolidation = ₹100 after = SAME RISK. Focus on fundamentals, not price optics. If business is strong, buy anytime. If weak, avoid regardless of price.
Derivatives adjust proportionally to maintain contract value: Options Adjustment Example (1:10 consolidation): Old Contract: 1 lot = 500 shares, strike ₹10, premium ₹2. New Contract: 1 lot = 50 shares (÷10), strike ₹100 (×10), premium ₹20 (×10). Contract value unchanged: Old: 500 × ₹10 = ₹5,000. New: 50 × ₹100 = ₹5,000. Futures Adjustment: Lot size reduces proportionally. If old lot was 1,000 shares, new lot becomes 100 shares. Contract size in ₹ terms stays same. Practical Impact: (1) Open Interest: Positions auto-adjusted by exchange, (2) Margins: May change based on new lot sizes, (3) Liquidity: Often decreases post-consolidation, (4) Trading: New symbol may be introduced (e.g., YESBANK became YESBANKNS temporarily). Important: NSE/BSE issue circulars detailing exact adjustment formula. Check exchange website. If holding options during consolidation, broker will reflect adjusted contracts in your account. No action needed from your side, but verify adjustments are correct.
Historical Pattern (Research-based): Immediate Effect (Day 1-7): Often slight decline (2-5%) due to: (1) Negative perception, (2) Retail investors exit, (3) Liquidity reduces. Medium-term (1-6 months): Continued decline in 60% cases. Average additional fall: 10-20% from post-consolidation price. Why? Consolidation doesn't fix underlying business problems. Long-term (1+ year): 70% of stocks that did reverse split underperform market indices. Only 30% recover and outperform. Example (Vedanta): Did 1:7 consolidation when stock fell from ₹400 to ₹100. Post-consolidation price: ₹700 (7 × ₹100). Within 6 months: Fell to ₹500 (-28% from consolidation price). Reason: Commodity cycle weakness remained. Counter-Example (Yes Bank): After 1:10 consolidation, stock stabilized as government provided capital infusion. Business fundamentals improved. Key Takeaway: Don't invest BECAUSE of reverse split. Invest only if: (1) Underlying business is turning around, (2) Consolidation was for technical reasons (not distress), (3) Management has credible revival plan. Otherwise, stay away - consolidation is cosmetic, not curative.
Yes, companies CAN do multiple reverse splits, and it's a MAJOR red flag. Famous Example: Citigroup (US): Did reverse split in 2011 (1:10), stock later fell again, almost needed another. Indicates: (1) Chronic business problems not being fixed, (2) Management using accounting tricks instead of improving fundamentals, (3) Dilution likely between consolidations (issuing more shares), (4) Bankruptcy risk increasing. Typical Pattern: Company does 1:10 consolidation, stock ₹10 → ₹100. Over 2-3 years, falls back to ₹10 due to poor performance. Company does ANOTHER 1:10 consolidation, ₹10 → ₹100 again. Net effect: Original shareholder who had 1,000 shares now has 10 shares (99% reduction). Indian Context: Most Indian companies don't survive to do multiple reverse splits - they either: (1) Get delisted after first consolidation fails, (2) Go bankrupt, (3) Undergo corporate insolvency (NCLT). Investor Rule: If company announces consolidation and you check history shows PREVIOUS consolidation → RUN. This is terminal decline pattern. No recovery in sight.
Dividend Amount Per Share: Increases proportionally. Example: Old dividend: ₹1 per share. After 1:10 consolidation: ₹10 per share (10× higher). Total Dividend Received: UNCHANGED. Before: 1,000 shares × ₹1 = ₹1,000 dividend. After: 100 shares × ₹10 = ₹1,000 dividend. Same total amount. Dividend Yield: UNCHANGED if calculated correctly. Before: Stock ₹10, dividend ₹1, yield = 10%. After: Stock ₹100, dividend ₹10, yield = 10%. Same percentage. Practical Consideration: Companies doing reverse splits often CUT or SUSPEND dividends due to financial stress (that's why they needed consolidation). So post-consolidation, watch for: (1) Dividend reduction announcements, (2) Payout ratio changes (going unsustainable >100%), (3) Cash flow stress. Example: If company paying ₹1 dividend (₹10 per share post-consolidation) cuts dividend to ₹5 per share after consolidation, effective yield drops to 5%. Consolidation doesn't cause dividend cut, but underlying poor performance does. Both often happen together.