Bajaj Finance Ltd has become the talk of Dalal Street after its board approved a 1:2 stock split and a 4:1 bonus share issue, aiming to improve liquidity and increase retail investor participation. The announcements have drawn major attention, as investors look to understand how these corporate actions will impact their holdings and the stock’s future trajectory.
What is a Stock Split and Bonus Issue?
- Stock Split (1:2): Every one share of Bajaj Finance with a face value of ₹2 will be split into two shares of ₹1 each.
- Bonus Issue (4:1): Shareholders will receive 4 additional shares for every 1 share they hold post-split.
Impact on Shareholding
If you own 1 share of Bajaj Finance, here’s how it will change:
- After the 1:2 Stock Split: You will own 2 shares (face value ₹1 each).
- After the 4:1 Bonus Issue: For every 1 share, you get 4 bonus shares, so for 2 shares, you’ll get 8 bonus shares.
Final Holding = 2 original split shares + 8 bonus shares = 10 shares
While the number of shares increases tenfold, the overall investment value remains the same initially, as the stock price will adjust proportionally post-record date.
Record Date and Shareholder Eligibility
Bajaj Finance is expected to announce the record date shortly. Investors holding shares before this record date will be eligible for both the stock split and bonus issue.
Why Is Bajaj Finance Doing This?
According to market experts, Bajaj Finance is undertaking this move to:
- Improve stock liquidity by reducing the per-share price.
- Encourage retail participation, especially as the stock is high-priced.
- Signal strong fundamentals and confidence in the company’s future.
Stock Price Reaction
Following the announcement, Bajaj Finance stock saw a marginal uptick in intraday trading, reflecting positive sentiment. However, analysts warn that speculative volatility may arise around the record date.
Expert Take
“Bonus issues and splits are cosmetic changes but often trigger positive momentum, especially in high-growth companies. Bajaj Finance’s strong fundamentals make it an attractive long-term play,” said a market analyst at Motilal Oswal.
Conclusion
The 1:2 stock split followed by a 4:1 bonus issue means shareholders will end up with 10 shares for every 1 share they currently hold. While this won’t change your total investment value initially, it could enhance liquidity, improve affordability, and boost retail interest in the stock going forward.
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Disclaimer: This article is for informational purposes only and does not constitute investment advice. Please consult a certified financial advisor before making any investment decisions in the stock market.
