Same company, two units
After the hypothetical 1:1 bonus in 01.07.02, one Bharat Foods share at ₹500 became two shares at about ₹250. Nothing about the company changed. But a chart that plots the price of one share now has ₹500 on one side of the ex-date and ₹250 on the other — and one share before the bonus is not the same thing as one share after it.
It is like a shop that starts selling rice in half-kilo packs instead of kilo packs. The price on the shelf halves. Rice did not get cheaper.
An adjusted price history fixes this by converting the earlier prices into today's units. Every price before the ex-date is divided by an adjustment factor — 2 for a 1:1 bonus — so ₹500 is drawn as ₹250, and the line runs on without a cliff.
One history, drawn two ways
An illustrative price path for Bharat Foods with a hypothetical corporate action on the dotted line. Pick the event, then switch between the prices as they traded and the adjusted ones.
The path is illustrative and the same for every reader; only the event and the view change. Factors are rounded.
Working out the factor
For a bonus, add the new shares to the old and divide by the old: a 1:1 bonus gives (1 + 1) ÷ 1 = 2; a 1:2 bonus, where two shares become three, gives 1.5. For a split, divide the old face value by the new one: ₹10 into ₹5 is 2.
For a rights issue, divide the price before the ex-date by the theoretical ex-rights price: ₹500 ÷ ₹483.33 ≈ 1.0345 for the 01.07.03 example. For a dividend, the factor is the price divided by the price less the dividend: ₹500 ÷ ₹496 ≈ 1.008.
A buyback has no factor. The company buys shares at a price, and nobody's shares are converted into anything — so a buyback leaves no adjustment on the chart, only whatever the market did.
- 1:1 bonus, or a ₹10 → ₹5 split (factor 2)
- ₹250
- 1:2 bonus (factor 1.5)
- ₹333.33
- Rights 1 for 5 at ₹400 (factor ≈ 1.0345)
- ₹483.33
- ₹4 dividend, if the chart adjusts for dividends (factor ≈ 1.008)
- ₹496
A screener says a company's share price is down 48% over the year. You notice it did a 1:1 bonus in March. What do you check first?
What a raw history quietly breaks
Percentage changes across the ex-date. The 48% fall in the question above, or a 52-week high that was set in the old units and may never be reached again in the new ones.
Lines and levels drawn by hand. A price you marked at ₹480 before a 1:1 bonus corresponds to ₹240 after it. Part 06 is about exactly those levels, and it assumes they are in one unit.
Anything averaged across the date — a moving average that mixes ₹500 days with ₹250 days describes neither. And your own notes and alerts: brokers handle standing orders around corporate actions differently, and some cancel them, so check what yours does before an ex-date.
Before a split from ₹10 to ₹2 face value, a share's highest price was ₹1,500. On an adjusted chart, where does that high sit?
Look for whether it says adjusted, and adjusted for what. Many charting services adjust for bonuses and splits automatically; whether dividends are adjusted is often a separate setting, and different data sources make different choices. On the ex-date itself the exchange adjusts the reference price for the event, so the day's price band starts from the right place. When you compare a price from an old article, an old statement or your own notes with today's, convert it first.
That completes chapter 01.07. A company can pay you, reshape your shares, ask you for money or buy you out — and none of it happens without rules, disclosures and a regulator watching. That is chapter 01.08.