NBFC-giant Bajaj Finserv skyrocketed nearly 8% on Tuesday after shares turned pre-split and ex-bonus ahead of their record date. There was a buying sentiment among investors throughout the trading session. The large-cap company has announced 1:1 bonus shares and 5:1 stock split for eligible shareholders. Through these incentives, Bajaj Finserv encourages small potential shareholders to participate in the future of the company. Post the ex-date, Bajaj Finserv shares have become affordable and affordable for both new and existing investors.
Bajaj Finserv has set September 14 as the record date for both the bonus issue and the stock split. Accordingly, the shares have corrected on 13th September which is the pre-date for these gains.
on BSE, Bajaj Finserv shares rise to settle at 68.65 or 4% 1784.45 each. Shares touch intraday high 1846 each – resulting in a jump of at least 7.6% on the day.
The market valuation of NBFCs is around 2,84,229.95 crores.
last month, announcing stock split and bonus issue, Bajaj Finserv said, “The company and its subsidiaries have grown significantly in terms of business and performance over the years. This is reflected in the company’s share price, which touched a peak of Rs 19,325 in October.” Was gone. 2021. Since then the price has been hovering around 12,200. At present, retail/individual shareholders comprise 98% of the total number of shareholders holding approximately 17.52% of the paid-up value of the shares. Among its peers, the company’s share price is one of the highest along with having one of the smallest capital bases.”
“As the stock price rises further, it will be difficult for small potential shareholders to participate in the future of the company,” it added.
Bajaj Finserv Bonus Issue
The NBFC has announced a bonus issue of 796,404,635 equity shares, each with a full payout face value of Re 1. The ratio of bonus shares is 1:1, simply put, Bajaj Finserv will issue one bonus equity share for every existing fully paid-up equity share.
Bajaj Finserv’s free reserve is required for the bonus issue to be implemented as a whole 79.64 crores.
Notably, as of March 31, 2022, the company’s free reserves balance was approx. 4,185.56 crore.
Bajaj Finserv Stock Split
The company will split each existing equity share of face value 5 each in five equity shares with a face value of Re 1 per equity share fully paid— taking the ratio to 5:1.
The company plans to complete the stock split process on or before September 26, according to a regulatory filing.
Should you buy Bajaj Finserv shares after the ex-split and ex-bonus date?
In their research note on Tuesday, analysts at ICICI Direct said, “The pre-split and bonus date is today and the record date is September 14. Accordingly, the share price has been adjusted to the opening price. 1757 / against the closing price of the share 17158/share tomorrow.”
On stock valuations, analysts said, “Bajaj Finserve share price has risen over ~3x over the past five years,” adding, “We revise our recommendation to BUY to HOLD.”
“The expected healthy growth in the lending AUM and insurance segment and the focus on digitization remain positive. However, with the recent rally in stock price the holding company discount has reduced. Thus, we expect Bajaj Finserv to see ~33x FY24E EPS (factoring 10% discount) and revise our target price 1850/share,” added the analysts note.
The key triggers for future performance as per ICICI Direct’s note are –
– Digital transformation, customer addition and ambitious targets on AUM growth (from 25-27% CAGR 3.8–4 lakh crore by FY25) to boost profitability
– Product launches and selective product mix to aid premium growth; Focus on claims and OPEX to support income in the life and general insurance business
– Healthy traction across all businesses to drive consolidated revenue and earnings
Bajaj Finserv is the holding company of the Bajaj Group’s financial services businesses. The company serves millions of clients in the financial services sector by providing solutions for asset acquisition through financing, asset protection through general insurance, family security, and income security in the form of life and health insurance, and retirement and savings solutions. provides.
Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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