Bajaj Finserv gains 4% as board to consider bonus, stock split plan

The company's board will meet on July 28, 2022, to consider a proposal for the sub-division of equity shares of the Company and/or issue of fully-paid bonus equity shares

Shares of Bajaj Finserv gained 4 per cent to Rs 13,096.80 on the BSE in Tuesday's intra-day trade, in an otherwise weak market, after the company announced that its board will consider maiden bonus issue and stock split plan on Thursday, July 28, 2022.

At 09:26 AM, the stock was 2.6 per cent higher at Rs 12,935, as compared to a 0.47 per cent decline in the S&P BSE Sensex.

"The board of directors, at its meeting scheduled on July 28, 2022, will also consider a proposal for the sub-division of equity shares of the Company of face value of Rs 5 and/or issue of fully-paid bonus equity shares to the members of the Company," Bajaj Finserv said in an exchange filing, after market hours, on Monday.

Earlier on June 27, Bajaj Finserv had announced that a meeting of the board of directors of the Company will be held on Thursday, July 28, 2022, inter-alia, to consider the unaudited financial results for the quarter ending 30 June 2022 (Q1FY23).

A stock split is a corporate action, where a company splits its shares into multiple new ones. Split shares neither add any new value, nor dilute the ownership stake of the shareholders. However, what they do is increase the number of shares of the company.

The main stock split benefit is that the shares of a company generally see increased liquidity. Since shares have now become more accessible to retail investors, more people would show increased demand for it, which can increase liquidity in the counter. Buying and selling shares will be far easier after a stock split.

In the past one month, Bajaj Finserv has outperformed the market by gaining 12 per cent, as compared to 5.3 per cent rise in the S&P BSE Sensex. However, ovet the last three months, the stock has underperformed the market by falling 15 per cent, as against 2 per cent decline in the benchmark index.

In Q1FY23, Bajaj Finserv's consolidated revenue is expected to grow at 25.8 per cent year-on-year (YoY) to Rs 17,542 crore led by pick up in lending business, and coupled with continued healthy traction in premium accretion in insurance businesses.

Healthy growth in assets under management (AUM) is expected to boost operational performance. Focus on individual business in life insurance & continued revival in health & credit protect business in general insurance may support premium accretion. Moderation in slippages (in lending business), claims (in insurance business) and base effect is expected to result in 61 per cent YoY growth in earnings at Rs 1,346 crore, ICICI Securities said in a result preview.

Technical View

Bias: Marginally Positive

Support: Rs 12,600

Resistance: Rs 13,750

Bajaj Finserv has zoomed over 22 per cent, so far this month, from a low of Rs 10,727 touched on July 01. Further, in the last six trading sessions, the stock has managed to sustain above its 20-DMA and the 50-DMA .

The 20-DMA, at Rs 11,973, is now seen closing-in with the 50-DMA at Rs 12,092. As and when the moving-averages crossover happens, the underlying sentiment should further aid the bulls.

Currently, the stock seems to be testing the resistance at the higher-end of the Bollinger Band at Rs 13,050-odd level, as per the daily chart. Above this, the stock can potentially rally to Rs 13,750. On the downside, the stock has near support around its 100-WMA at Rs 12,600.

Among the key momentum oscillators, the DI index and the MACD are clearly in favour of the bulls, while the Slow Stochastic has turned negative.

(With inputs from Rex Cano)