Bajaj Finserv Announces Stock Split, Bonus Share Issue; Key Details Investors Should Know

Bajaj Finserv has said that his board of directors has also approved the proposal for a stock split or subdivision of shares in the ratio of 1:5 and has also approved the issuance of bonus shares in the ratio of 1:1. Board of Directors has approved the subdivision of each existing share of shares with a par value of Rs 5/- into five shares with a par value of Rs 1/- fully paid up. It also approved the issuance of one bonus share with a par value of Rs 1/- for every 1 fully paid-up share of Rs 1/-”, the financial services firm announced today in an exchange application.

The company will be required to amend the capital clause of the company’s deed of incorporation, subject to shareholder approval to be obtained by letter, it said in a regulatory filing.

For Q1FY23, Bajaj Finserv’s consolidated net profit increased by about 57 percent to Rs 1,309 crore compared to Rs 833 crore in the same quarter last year. The profit includes the unrealized MTM loss of insurance subsidiaries of Rs 283 crore against a profit of Rs 25 crore year-on-year (on an annual basis).

Bajaj Finserv is the holding company for the various financial services companies under the Bajaj group.

Bajaj Finserv Stock Split

A stock split increases the number of shares outstanding by issuing more shares to current shareholders. Stock split lowers the market price of the individual shares, but does not change the market capitalization of the company.

A company makes a stock split decision to make its shares more affordable when the price levels are very high, thus leading to an increase in the liquidity of the shares. Meanwhile, bonus shares are fully paid additional shares issued by a company to its existing shareholders.

The company plans to complete the necessary corporate action on or before September 26, 2022, subject to necessary approvals.

“The company and its subsidiaries have grown significantly over the years in terms of operations and performance. Among its peers, the company’s stock price is one of the highest, while it has one of the smallest capital bases.

Stock price history

The increase in Bajaj Finserv to 10 percent came after the board of directors approved the 1:1 bonus issuance and the 1:5 share split.

Shares of Bajaj Finserv have fallen more than 15 percent in 2022 (year-to-date) so far, while they are up about 4 percent in a one-year period. Bajaj Finserv is focused on lending, asset management, asset management and insurance services.

The company was established in 2007 as a result of the demerger of Bajaj Auto Limited to further the group’s interest in financial services. Bajaj Finserv is the holding company for the financial services companies of the Bajaj Group.

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