Bajaj Finserv surges 8% ahead of board meet for bonus, stock split

The company is expected to post 25.8 per cent YoY growth in Q1 revenue, led by pick up in lending business coupled with continued healthy traction in premium accretion in insurance business.

Shares of Bajaj Finserv surged 8 per cent to Rs 14,390 on the BSE in Thursday’s intra-day trade ahead of board meeting today to consider a proposal for the sub-division of equity shares of the company and/or issue of fully-paid bonus equity shares. The board will also consider the unaudited financial results for the quarter ending 30 June 2022 (Q1FY23).

In the past three trading sessions, the stock has gained 14 per cent after the company on Tuesday, July 26, announced its plan for stock split/bonus issue. Bajaj Finserv said that the board will meet on July 28, to consider 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.

In the last one month, the stock has outperformed the market by appreciating 26 per cent, as compared to a 6.4 per cent rise in the S&P BSE Sensex. However, over the last three months, the stock has underperformed the market by falling 5 per cent, as against 2 per cent decline in the benchmark index.

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 benefit of a stock split 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.

Bajaj Finserv is primarily engaged in the business of promoting financial services such as finance, insurance, broking, investments etc. including distribution using digital platforms through its investments in subsidiaries and joint ventures. Bajaj Finance is a subsidiary of Bajaj Finserv.

For 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 coupled with continued healthy traction in premium accretion in insurance businesses, according to ICICI Securities.

Healthy growth in 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, the brokerage firm said.