Bajaj Finserv will become estranged this week. 10 key points

Bajaj Finserv stock split: Shares of NBFC giant Bajaj Finserv are set to be split this week. The company will divide one existing capital share into five capital shares. Prior to the stock split and bonus issuance, Bajaj Finserv shares had a volatile week from September 5-9. However, within a month, shares of Bajaj Finserv soared nearly 10% on Dalal Street, making many investors rich. The stock still has further upside potential in the future.

Last week on Friday, shares of Bajaj Finserv closed at 17,202.65 each less 178.80 or 1.03%. The market capitalization of the company is approximately 2 74,006.47 crore.

In one month (August 10 to September 9), the stock gained almost 10%. In August, shares of Bajaj Finserv were among the best performers on Sensex and Nifty 50 with nearly 13% up each.

Here are 10 key points from the Bajaj Finserv stock split

1. NBFC will divide each existing share capital having a par value of 5 each into five capital shares with a par value of 1 st per fully paid-up capital share. The stock split ratio is 5:1.

2. Bajaj Finserv has set September 14 as the record date for determining shareholders eligible for the stock split benefit.

3. So the ex-stock split date is September 13th. In general terms, the ex-split is the date when a stock is traded without the benefit of the corporate action, in this case, the stock split. The ex-split date is one or two days before the check-in date.

4. On its website, ICICI Direct stated that if you buy Bajaj Finserv shares on September 12, those shares should be credited to your Demat account on September 14 (i.e. the record date) , thus making you eligible for the bonus and the split.

5. Among the many benefits of stock splits is that these stocks become more affordable for existing and new investors. In addition, this decision strengthens the liquidity of the listed company. Through the stock split, Bajaj Finserv plans to encourage potential small shareholders to participate in the company’s future.

6. Justifying the stock split, Bajaj Finserv said last month that the company and its subsidiaries had experienced significant growth, in terms of business and performance, over the years. This is reflected in the company’s share price, which peaked at Rs. 19,325 in October 2021. Since then, the price has hovered around 12,200. Currently, retail/individual shareholders represent 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 while having one of the smallest capital bases. As the stock price increases, it will be increasingly difficult for potential small shareholders to participate in the future of the company.

7. In a stock split, the listed company increases the number of shares outstanding by issuing more shares to eligible shareholders. The stock split also decreases the market price of individual stocks, but does not cause the market capitalization of the company to change. In the case of Bajaj Finserv, an eligible shareholder will receive 5 shares on their only existing share, thereby increasing the number of Bajaj Finserv shares in their portfolio. The price of Bajaj Finserv shares will also become cheaper and affordable for new and existing investors.

7. According to market guidelines, a company can only set a record date for corporate actions such as dividends, stock splits and bonus issues after receiving shareholder approval. Bajaj Finserv received approval on September 2 for the stock split by postal vote of company members.

9. As of June 30, 2022, according to the shareholding scheme, Bajaj Finserv has 2,99,380 shareholders with 15,91,37,444 fully paid shares.

10. The company expects to complete the stock split process no later than September 26, according to the regulatory filing. However, the company had also informed the exchanges that “14,417 shares of the par value of 5 acquired rights are suspended. If a complaint is received and processed by the Company, the pre and post-issued, paid-up and subscribed capital will undergo modifications to this effect.

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