Bajaj Finserv shares trade ex-split, bonus; stock jumps

Shares of Bajaj Finserv started trading ex-split and bonus on the BSE in Tuesday's trading session, a day ahead of the record date for for the purpose of determining the members, eligible for the sub-division of existing equity shares and issue of bonus equity shares of the company. The stock rose nearly 5% to ₹1,791 apiece on the BSE.

The company fixed Wednesday, 14 September 2022 as the 'record date' for its stock split and bonus shares issue. While declaring its Q1FY23 results, Bajaj Finserv had said that its board has also approved the proposal of stock split or sub division of equity shares in the ratio of 1:5 as well as gave its nod for the issuance of bonus shares in the ratio of 1:1.

Explaining the rationale behind the stock split and issue of bonus shares, Bajaj Finserv had said that the company and it's subsidiaries have grown significantly, in terms of business and performance, over the years. This is reflected in the share price of the Company, which touched a peak of ₹19,325 in October 2021.

A stock split increases the number of shares that are outstanding by issuing more shares to the current shareholders. Stock split decreases the market price of the individual shares, however, does not result in changing the market capitalization of the company.

A company engages in stock split decision to make its stock more affordable if its price levels are very high, which in thus would lead to increase in liquidity in the stock. Meanwhile, bonus shares are fully paid additional shares issued by a company to its existing shareholders.

Bajaj Finserv is focused on lending, asset management, wealth management and insurance services. The company was formed in 2007 as a result of its demerger from Bajaj Auto Limited to further the group's interest in financial services. Bajaj Finserv is the holding company for the businesses dealing with financial services of the Bajaj Group.

For Q1FY23, Bajaj Finserv's consolidated net profit surged about 57% to ₹1,309 crore as compared to ₹833 crore in the same quarter last year. The profit included the unrealised MTM loss of insurance subsidiaries of ₹283 crore as against gain of ₹25 crore year-on-year (YoY).