What Bajaj Finserv’s Stock Split, Bonus Issue Announcement Mean for Investors

Explaining the reason behind the stock split and issue of bonus shares, Bajaj Finserv 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 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 competitors, the company’s share price is one of the highest as well as having one of the smallest capital bases.

“As the stock price rises further, it will be difficult for the small potential shareholders to participate in the future of the company. Keeping in mind the spirit of inclusion and rewarding the shareholders. The Board of Directors, in its meeting held today, said the said Approved and recommended corporate actions,” Bajaj Finserv said.

a stock split Increases the number of outstanding shares by issuing more shares to existing shareholders. A stock split reduces the market value of individual shares, however, the market capitalization of the company does not change.

A company engages in a stock split decision to make its stock more affordable if its price level is too high, which will increase the liquidity in the stock. For example, in a 1:5 stock split of Bajaj Finserv, for every 1 share held by a shareholder, it would become 5 shares.

During this, bonus share Fully paid-up shares are additional shares issued by a company to its existing shareholders. Many companies decide to issue bonus when they are not in a position to pay dividend to their shareholders despite earning good profit for the respective quarter. Bajaj Finserv has announced issuance of bonus in the ratio of 1:1, which means that for every 1 share, the shareholder will get one additional bonus share.

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