Bajaj Finance: Bonus Shares, Stock Split, and Dividends in Focus After 5% Drop

Corporate actions often create ripples across the stock market, impacting stock prices, investor sentiment, and long-term valuations. The most recent instance of this effect was seen on 29th April 2025, when Bajaj Finance announced a bonus share issue, a stock split, and declared a dividend, making it one of the most shareholder-friendly steps by a major Indian financial company. What does this series of corporate actions signify? How are the shareholders affected by this move? Let’s understand. 

Overview of Bajaj Finance Limited:

Founded 1987 as a vehicle financing firm, Bajaj Finance Limited (BFL) has grown into one of India’s largest and most diversified non-banking financial companies (NBFCs). BFL serves over 101 million customers as of March 2025, with operations across 4,145 locations in India. The company has established a strong presence in urban and rural markets, offering financial services tailored to various customer segments. Over the years, it has introduced 26 product lines and 51 product variants, supported by technology-driven innovations such as the EMI Card and Flexi loan offerings.

1. Operational Overview:

Bajaj Finance operates across three segments:

• Consumer finance: personal loans, gold loans, home loans, lifestyle, and digital product financing
• SME finance: business loans, working capital loans, and loans against property
• Commercial lending: vendor finance, lease rental discounting

The company also accepts deposits and offers investment products like fixed deposits and mutual funds. Through subsidiaries Bajaj Housing Finance Ltd. and Bajaj Financial Securities Ltd., it has expanded into housing finance and capital markets.

2. Financial Picture:

Bajaj Finance has recorded steady financial growth over the past five fiscal years. 

The company’s key profitability metrics, such as ROA and ROE, stood at 4.6% and 19.2%, respectively, while asset quality remained stable with a Gross NPA of 0.96% and Net NPA of 0.44%. Bajaj Finance maintained a healthy Capital Adequacy Ratio (CAR) of 21.93% as of March 2025.

Additionally, 

Financial Metric	FY25 (as of March 2025)	FY24 (as of March 2024)	YoY Growth
Assets Under Management (AUM)	Rs.416,661 crore	Rs.3,30,615 crore	26%
Net Interest Income (NII)	Rs.9,807 crore	Rs.8,013 crore	22%

Corporate Actions Of Bajaj Finance:

On 29th April 2025, Bajaj Finance Limited unveiled a trio of shareholder-centric corporate actions: bonus shares, a stock split, and substantial dividend payouts.

1. Bonus Share Issue – 4:1 Ratio:

Bajaj Finance announced a bonus share issue in a 4:1 ratio. Shareholders will receive four additional equity shares for every one share held, with a face value of Rs.1 each. The bonus issue will be funded through the company’s free reserves of Rs.497 crore. The process is scheduled for completion on or before 27 June 2025, subject to necessary approvals. This is the company’s second bonus issue, which occurred in September 2016 in a 1:1 ratio.

2. Stock Split – 1:2 Ratio:

The board approved a stock split in the Ratio of 1:2. Each equity share with a face value of Rs.2 will be subdivided into two equity shares of Rs.1 each. The record date for the split has yet to be announced, and completion is planned by or before 27 June 2025. This is Bajaj Finance’s second stock split; the first took place in September 2016 in a 1:5 ratio.

3. Dividend Declaration – Rs 56 per Share:

The company declared a special interim dividend of Rs.12 per share (600% of face value). It recommended a final dividend of Rs.44 per share (2200% of face value), bringing the total dividend to Rs.56 per share for FY25. The special dividend is linked to gains from Bajaj Housing Finance Limited’s IPO. 

The record date for the interim dividend is 9 May 2025, with payment scheduled on or around 26 May 2025. The final dividend is subject to shareholder approval at the AGM on 24 July 2025, with a record date of 30 May and expected payment on or about 28 July 2025. 

Implications Of The Corporate Actions:

• Market Reaction: Shares fell nearly 5% on 30 April 2025, closing at Rs.8,634.50 after the announcements. However, they rebounded 2.7% on 2 May, closing at Rs.8,868, reflecting a short-term market adjustment to the corporate actions.

• Stock Split (1:2): Each existing share will be split into two, doubling the number of shares held while halving the price per share. This does not affect the total value of holdings but improves stock accessibility and liquidity.
• Bonus Share Issue (4:1): Shareholders will receive four additional shares for every one share owned (post-split), increasing their total share count fivefold. The share price will adjust accordingly, with no change in overall portfolio value. Bonus shares are not taxed upon receipt, but capital gains tax applies to future sales.

So, as a result of the corporate actions, say if you owned 1,000 shares of Bajaj Finance before the corporate actions, the 1:2 stock split would double your shares to 2,000. After that, the 4:1 bonus issue would give you 8,000 more shares (4 bonus shares for every 1 held). So, in total, you would now have 10,000 shares. However, while the number of shares increases, the total value of your investment stays the same right after the changes, as the share price adjusts accordingly. 

Bottomline:

Bajaj Finance’s recent corporate actions, including declaring bonus shares, stock splits, and dividends, showcase its strong financial position and commitment to rewarding its shareholders. While these changes will affect your shareholding and the stock’s market dynamics, the overall value of your investment remains unchanged initially. As always, evaluating these developments carefully and conducting thorough research before making any investment decisions is essential.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

FAQ