Bajaj Finance, a leading non-banking financial company (NBFC) in India, has recently made headlines with its corporate actions, including a stock split, bonus share issuance, and dividend announcements. These developments have sparked significant interest among investors, particularly due to the sharp price adjustment observed on June 16, 2025, the record date for these events. This comprehensive guide dives into the details of Bajaj Finance’s stock split, bonus shares, dividend payouts, and their implications for investors. Whether you’re a seasoned shareholder or a retail investor eyeing an entry, this article provides actionable insights to navigate these changes effectively.
Understanding Bajaj Finance’s Corporate Actions
Bajaj Finance announced a series of strategic moves on April 29, 2025, aimed at enhancing shareholder value and increasing market liquidity. These actions include a stock split, bonus share issuance, and dividend declarations. Each move has specific implications for investors, affecting share prices, portfolio value, and investment strategies. Let’s break down these events to understand their impact.
What Is a Stock Split?
A stock split is a corporate action that increases the number of shares in a company by dividing each existing share into multiple shares. In Bajaj Finance’s case, the company implemented a 1:2 stock split, reducing the face value of each share from ₹2 to ₹1. This means that for every share held, investors receive two shares, effectively doubling the number of shares in their demat account.
The primary goal of a stock split is to make shares more affordable for retail investors, thereby increasing liquidity and trading volume. For instance, a share trading at ₹9,334 before the split would theoretically adjust to approximately ₹4,667 post-split, assuming no other market factors influence the price.
What Are Bonus Shares?
Bonus shares are additional shares issued to existing shareholders at no extra cost, typically funded from the company’s reserves. Bajaj Finance announced a 4:1 bonus issue, meaning for every share held, shareholders receive four additional bonus shares. Combined with the stock split, this results in a significant increase in the number of shares held.
For example, if you held one share before these events, the stock split would convert it into two shares, and the bonus issue would add eight more shares (four bonus shares for each of the two split shares). As a result, one share becomes ten shares in your demat account.
Dividend Announcements
In addition to the stock split and bonus shares, Bajaj Finance declared a final dividend of ₹44 per share and a special dividend of ₹12 per share for FY25, totaling ₹56 per share. These dividends reward shareholders with cash payouts, enhancing the stock’s attractiveness. The record date for the final dividend is May 30, 2025, with payments expected to be credited by July 28, 2025.
Why Did Bajaj Finance’s Share Price Drop by 90%?
On June 16, 2025, investors noticed a dramatic 90% drop in Bajaj Finance’s share price, from a previous closing of ₹9,334 to approximately ₹933.40. This sharp decline alarmed many, but it’s not a crash—it’s a price adjustment due to the stock split and bonus share issuance.
Price Adjustment Explained
When a company issues a stock split or bonus shares, the share price adjusts to reflect the increased number of shares. In Bajaj Finance’s case, the combined effect of the 1:2 stock split and 4:1 bonus issue means one original share becomes ten shares. To maintain the same market capitalization, the share price is divided by the adjustment factor (10 in this case).
For example:
- Pre-event: 1 share at ₹9,334.
- Post-split: 2 shares at ₹4,667 each (₹9,334 ÷ 2).
- Post-bonus: 10 shares (2 split shares + 8 bonus shares) at ₹933.40 each (₹9,334 ÷ 10).
This adjustment ensures that the total investment value remains unchanged, although the number of shares increases significantly. The perceived “loss” in share price is temporary and corrects once the additional shares are credited to investors’ demat accounts.
Why the Temporary Loss in Portfolio Value?
On June 16, 2025, the record date, the share price adjusted to reflect the split and bonus, but the additional shares may not yet be credited to demat accounts. This delay can cause a temporary drop in portfolio value, as the number of shares in your account remains the same while the price per share plummets. Investors should not panic, as the value will normalize once the bonus and split shares are credited, typically within 4–5 days per SEBI’s norms, with an estimated completion by June 27, 2025.
Key Dates and Eligibility for Bonus and Split Shares
To benefit from Bajaj Finance’s stock split and bonus shares, investors needed to hold shares in their demat accounts by the close of trading on June 13, 2025, as June 16, 2025, was the record date. Shares purchased on or after June 16 are not eligible for these benefits.
When Will Shares Be Credited?
According to Bajaj Finance’s announcement, the bonus and split shares are expected to be credited to demat accounts by June 27, 2025. However, SEBI’s guidelines suggest that this process could be completed within 4–5 days, potentially by June 21 or 22, 2025. Once credited, the increased share count will restore the portfolio’s value, aligning with the adjusted share price.
Impact on Investors: Opportunities and Considerations
The stock split and bonus issue have several implications for investors, from increased liquidity to psychological benefits for retail participants. Let’s explore how these changes affect different types of investors.
Benefits for Retail Investors
- Enhanced Affordability: Before the split, Bajaj Finance’s share price hovered above ₹9,000, making it challenging for retail investors with limited capital to buy shares. Post-split and bonus, the price of around ₹900 makes the stock more accessible, encouraging broader participation.
- Increased Liquidity: With ten times the number of shares in circulation, trading volume is likely to rise. Higher liquidity reduces price volatility and makes it easier for investors to buy or sell shares without significantly impacting the market price.
- Psychological Appeal: A lower share price often attracts retail investors who perceive the stock as “cheaper,” even though the overall investment value remains unchanged. This psychological factor can drive demand and trading activity.
Impact on Long-Term Investors
For long-term shareholders, the stock split and bonus shares do not alter the intrinsic value of their holdings. However, they benefit from:
- Higher Dividend Payouts: With ten times the number of shares, the total dividend received will increase significantly. For example, a shareholder with 10 shares pre-event would receive ₹560 (10 shares × ₹56). Post-event, with 100 shares, the same investor would receive ₹5,600 in dividends.
- Potential for Growth: Bajaj Finance’s strong fundamentals and leadership in the NBFC sector make it a compelling long-term investment. The increased share count allows investors to trade or rebalance their portfolios more flexibly.
Challenges for Short-Term Investors
Short-term traders may face temporary confusion due to the price adjustment and delayed share crediting. The perceived 90% drop in share price can create uncertainty, but this is a standard outcome of corporate actions like splits and bonuses. Traders should focus on the adjusted price and avoid knee-jerk reactions to the temporary portfolio value drop.
Investment Strategy: Buy, Sell, or Hold?
Bajaj Finance is a powerhouse in the financial services sector, known for its robust growth, diversified portfolio, and consistent returns. With a 36% return in 2025 and a 279% return over five years, the stock has rewarded long-term investors handsomely. Here’s how to approach it post-split and bonus:
Buy on Dips
Given the current market’s cautious sentiment, a buy-on-dips strategy is recommended. Instead of investing a lump sum, consider accumulating shares during price corrections. This approach mitigates risk in a volatile market and allows you to build a position in a high-quality stock at favorable prices.
Hold for the Long Term
Bajaj Finance’s leadership in consumer finance, coupled with its strong financial performance, makes it an ideal candidate for long-term holding. The stock split and bonus shares enhance its appeal by improving affordability and liquidity, potentially driving future price appreciation as retail participation grows.
Avoid Panic Selling
The temporary drop in portfolio value due to the price adjustment can be unsettling, but selling now would lock in a perceived loss. Wait for the bonus and split shares to be credited, as this will restore your portfolio’s value. Focus on the stock’s fundamentals and long-term growth potential rather than short-term price fluctuations.
Futures and Options (F&O) Adjustments
For traders in the futures and options market, the stock split and bonus issue necessitate adjustments to lot sizes and strike prices.
Lot Size Changes
- Pre-event: The lot size for Bajaj Finance futures was 125 shares.
- Post-event: Due to the 1:2 split (adjustment factor of 2) and 4:1 bonus (adjustment factor of 5), the total adjustment factor is 10 (2 × 5). The revised lot size is:
- June 2025 Expiry: 1,250 shares (125 × 10).
- July 2025 Expiry Onwards: 750 shares, reflecting a revised market lot.
Strike Price Adjustments
Strike prices for options contracts are also adjusted by dividing the original strike price by the adjustment factor (10). For example:
- A pre-event strike price of ₹9,300 becomes ₹930 post-event.
These adjustments ensure that the economic value of F&O contracts remains consistent with the increased share count and reduced price per share.
Why Do Companies Issue Stock Splits and Bonus Shares?
Stock splits and bonus shares serve strategic purposes for companies like Bajaj Finance, benefiting both the company and its shareholders.
Boosting Liquidity
By increasing the number of shares in circulation, stock splits and bonus issues enhance market liquidity. More shares mean more trading opportunities, attracting a broader investor base, including retail participants who may have been priced out previously.
Attracting Retail Investors
A lower share price post-split makes the stock more accessible, encouraging retail investors to participate. This increased demand can drive trading volumes and potentially support price stability or growth over time.
Rewarding Shareholders
Bonus shares reward existing shareholders without requiring additional investment, signaling confidence in the company’s future profitability. Dividends further enhance shareholder returns, making Bajaj Finance a compelling choice for income-focused investors.
Bajaj Finance’s Financial Strength
Bajaj Finance’s position as a leading NBFC underpins its appeal as an investment. Here’s a snapshot of its performance:
- 2025 Performance: A 36% return year-to-date, despite a 3% fluctuation in the past month.
- One-Year Return: 28%, reflecting steady growth.
- Five-Year Return: A remarkable 279%, nearly quadrupling investors’ capital.
The company’s diversified portfolio, spanning consumer finance, SME lending, and digital initiatives, supports its resilience and growth potential. Its ability to deliver consistent returns makes it a cornerstone for long-term investment portfolios.
Dividend Details and Investor Benefits
The announced dividends of ₹56 per share (₹44 final + ₹12 special) add significant value for shareholders. Here’s how it impacts investors:
- Pre-event Example: An investor with 10 shares would receive ₹560 in dividends.
- Post-event Example: With 100 shares after the split and bonus, the same investor would receive ₹5,600, a tenfold increase in dividend income.
The final dividend’s record date is May 30, 2025, with payments expected by July 28, 2025. This predictable cash flow enhances Bajaj Finance’s appeal for income-seeking investors.
Common Investor Questions Answered
1. Why Does My Portfolio Show a Loss?
The apparent loss is due to the price adjustment on the record date, while the additional shares are yet to be credited. Once the bonus and split shares appear in your demat account, the portfolio value will normalize.
2. Should I Buy Shares on the Record Date?
Purchasing shares on June 16, 2025, does not qualify you for the bonus or split benefits. You needed to hold shares by June 13, 2025, to be eligible.
3. When Will My Portfolio Value Recover?
The portfolio value will recover once the additional shares are credited, likely by June 21–27, 2025. Monitor your demat account for updates.
4. Is Bajaj Finance a Good Long-Term Investment?
Yes, Bajaj Finance’s strong fundamentals, market leadership, and consistent returns make it an excellent choice for long-term investors. The stock split and bonus shares further enhance its accessibility and growth potential.
Strategic Takeaways for Investors
Bajaj Finance’s stock split, bonus shares, and dividend announcements are strategic moves to enhance shareholder value and market accessibility. Here’s how to approach this opportunity:
- Stay Calm During Price Adjustments: The 90% price drop is a standard outcome of the split and bonus. Avoid panic selling and wait for share crediting.
- Adopt a Long-Term Perspective: Bajaj Finance’s robust financials and market position make it a solid long-term investment. Hold or accumulate shares during dips.
- Leverage Increased Liquidity: The lower share price and higher share count make trading easier, especially for retail investors.
- Monitor Dividend Payouts: The ₹56 per share dividend adds a reliable income stream, enhancing total returns.
- Understand F&O Adjustments: If trading in futures and options, account for the revised lot sizes and strike prices to align with the new share structure.
Conclusion: Seize the Opportunity with Bajaj Finance
Bajaj Finance’s stock split, bonus share issuance, and dividend declarations mark a pivotal moment for investors. While the immediate price adjustment may seem daunting, it’s a standard part of these corporate actions, designed to make the stock more accessible and liquid. With its stellar track record, leadership in the NBFC sector, and attractive dividend payouts, Bajaj Finance remains a top-tier investment choice.
For retail investors, the lower share price opens the door to participate in a high-growth stock. For long-term shareholders, the increased share count and dividends enhance returns. By adopting a disciplined approach—buying on dips, holding for the long term, and staying informed about share crediting—you can maximize the benefits of Bajaj Finance’s corporate actions. Stay focused on the company’s fundamentals, and let these strategic moves work in your favor.