Bajaj Finance Stock Undergoes 1:2 Split and 4:1 Bonus Issue, Aims for Enhanced Liquidity and Retail Participation
MUMBAI, INDIA – Bajaj Finance Ltd (NSE: BAJFINANCE) has initiated a significant corporate restructuring, with its shares trading ex-split and ex-bonus as of Monday, June 16, 2025. This dual action, comprising a 1:2 stock split and a 4:1 bonus issue, is strategically aimed at enhancing the stock’s liquidity and making it more accessible to a broader base of retail investors.
The non-banking financial company (NBFC) had announced these shareholder-friendly initiatives on April 29, coinciding with its Q4 FY25 earnings declaration. The record date for both the stock split and bonus issue was fixed as June 16, meaning investors holding Bajaj Finance shares at the close of trading on Friday, June 13, were eligible for these benefits.
Understanding the Corporate Actions:
- 1:2 Stock Split: This involves the subdivision of one equity share with a face value of ₹2 into two equity shares, each with a face value of ₹1. Essentially, the number of shares held by an investor doubles, while the face value per share is halved. The total value of the investment, however, remains unchanged immediately after the split, as the market price per share adjusts accordingly.
- 4:1 Bonus Issue: Following the stock split, Bajaj Finance has issued four bonus equity shares of ₹1 each for every one existing equity share of ₹1 each. This effectively quadruples an investor’s post-split shareholding.
Combined Impact for Investors:
The combined effect of these two corporate actions is substantial. For an investor holding, for example, 100 shares of Bajaj Finance prior to June 16:
- The 1:2 stock split would first convert those 100 shares into 200 shares (each with a face value of ₹1).
- Subsequently, the 4:1 bonus issue would grant an additional four shares for every one of those 200 shares, resulting in an extra 800 shares.
- Therefore, the original 100 shares would effectively transform into a total of 1,000 shares (100 original * 2 split * 4 bonus = 800 bonus shares + 200 split shares = 1000 shares, or simply 100 * 10 = 1000).
While the number of shares held by investors has significantly increased, it’s crucial for traders and investors to understand that this is a technical adjustment. The market price per share automatically adjusts downwards to reflect the increased number of outstanding shares, ensuring that the overall value of an investor’s holding remains the same immediately after the ex-date. For instance, if the stock closed at ₹9,334.15 on Friday, its theoretical adjusted price on Monday would be significantly lower, reflecting the tenfold increase in share count.
Why the Move?
Companies typically undertake stock splits and bonus issues to achieve several objectives:
- Enhanced Liquidity: By increasing the number of shares in circulation and reducing the per-share price, the stock becomes more accessible and affordable for a broader base of retail investors, potentially leading to higher trading volumes.
- Increased Retail Participation: A lower share price can attract small investors who might have previously found the stock too expensive.
- Shareholder Reward: Bonus issues are often seen as a way to reward existing shareholders by providing them with additional shares without any extra cost.
Market Performance and Analyst Outlook:
Bajaj Finance has been a strong performer over the long term, delivering multi-bagger returns. Its Q4 FY25 results showed a 17% year-on-year increase in net profit to ₹4,480 crore and a 22% rise in net interest income. The company also reported robust AUM growth of 26% and a 36% jump in new loan bookings.
Brokerages like CLSA and Jefferies have maintained positive ratings on Bajaj Finance, citing long-term growth drivers in consumer finance, digital transformation, and cross-selling opportunities. Axis Securities expects the company to deliver strong AUM and earnings growth in the medium term, driven by stable margins and improved operating leverage.
Investors and traders should monitor how the increased liquidity affects trading patterns and whether the reduced per-share price indeed leads to greater retail participation in the coming weeks. The underlying fundamentals and management’s strategic execution will continue to be the key drivers of long-term value.