The stock of Bajaj Finance Ltd was adjusted by a huge price on Intraday as the stock worked down to about 90 per cent lower than its late closing price.
The growth, however, is the direct result of corporate restructuring efforts that the company has made i.e. stock split and issue of bonus shares, and has no relation to the inability of the company to improve its financial or operating performance.
In accordance with the announcement in the first half of the current year, Bajaj Finance split its stocks in 1:2 and bonus issue in 4:1 ratio adding 10 times in total to the outstanding shares. As a result of this increase of share counts then, the price of the shares was adjusted in a corresponding proportion and there was no increase in the aggregate market capitalisation and no increase in the value of shares held by individual investors.
All of the outstanding equity shares that were of face value ₹2 were split into two equity shares of ₹1 face value. This was after a split whereby, four bonus shares were assigned to every one share. This means that each and every casual share as at the time before the record date turns into ten shares. As such, the share value fell in line from nearly ₹9300 rupees per unit to nearly ₹930 on the adjustment date.
The fact that the adjustment was made without the awareness of market participants was initially troubling in view of the big decline. Nevertheless, analysts and financial consultants have underlined that the dropdown is only nominal and does not reflect the actual downscale in the inherent worth of the firm.
The share base has been increased with the stock price recalibrated. Shareholders do not risk any cost and, indeed, the measure increases their liquidity and improves the availability of the stock by a larger group of investors, said equity strategists with a major Mumbai-based brokerage.
In a previous announcement, Bajaj Finance had selected June 16 as a record date to identify the eligible shareholders of the bonus shares. The bonus was available to those on the June 13 end of the trading day who had shares in their demat accounts, because of T+1 settlement regulation. The extra stocks are to be accredited to the qualified investors by June 27, according to what the company communicated to them now.
The volume that was witnessed in the National Stock Exchange (NSE) was flurried and the final adjusted stock closed with an advance of nearly 2.5 per cent showing a positive mood in the market as well as the confidence that investors have.
Good Financial Status
The corporate activities are witnessed in the context whereby Bajaj Finance reported a good financial performance. In its quarterly results for March 2025, it registered a growth of 19 per cent on a year-on-year basis in its net profit which is ₹4,546 crore. Its assets under management improved by 26 per cent to more than ₹4.16 lakh crore. Quarterly net interest income increased by 22 per cent to ₹9807 crores.
The quality of the company assets is stable and the gross non-performing assets (NPAs) stood at 0.96 and the net NPAs at 0.44.
Brokerage firms have remained positive about the outlook of the stock. Axis Securities believes that Bajaj Finance is likely to see a CAGR of 25-26 per cent in its AUM and earnings over FY26. The figure further forecasts the company to give a 4.5-4.6 % return on assets (ROA) and 19-21 % on equity (ROE) in the same period.
Strategic Implications
Stock changes and dividend actions provided by companies like stock splits and bonuses are mostly done with the hope that the company would engage more in retailing and offer better liquidity and affordability of the stock. The investor will maintain the same proportionate ownership in a company and their aggregate holding will not alter, despite the fact that the absolute price per share may be reduced.
The dividend policy has been shown in the case of Bajaj Finance, which involves splitting and giving bonuses, which has been indicative of the confidence that the company has over its business journey and also creates a need to expand its investor base. The relocation can also promote an increase in the trading volume in the short-run, and bind the stock to other active counters on the exchange.
Regulatory-wise, all the related changes in the contracts of the derivatives have been handled by the stock exchanges and Futures & Options (F&O) contracts have been modified in terms of the new price and the new size of the lot.
Although the drastic decrease in the price of its stocks is a shocking event in itself, it is the
expected scenery of value-neutral market restructuring with the purpose of promoting the accessibility and depth of the market. It is suggested that traders use the trading mindset and investors should not get confused with the adjustment, but, instead, pay attention to underlying fundamentals, which are strong. It is estimated that the recapitalized shares are to be credited by the middle of June, and the long-term growth prospective of the company seems well preserved.
Disclaimer:
StofinIQ is neither encouraging nor promoting any form of investment activity. The information on the site is informational and is formed based on open sources, including Mint, The Economic Times, and others. This announcement is cautioned to be used with traders and investors exercising their discretion and judgment before they make any financial commitments. StofinIQ does not accept any financial loss, risk, or liability caused by using this information.
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