The dramatic headline number that fooled many, but rewarded the informed
June 16, 2025, began with what appeared to be a financial disaster for Bajaj Finance shareholders. News feeds lit up with alarming headlines about a near 90% crash in the stock price. Social media buzzed with panic, and many retail investors likely felt their hearts skip a beat seeing the numbers.
But seasoned market participants knew better. What looked like a catastrophic meltdown was actually a well-orchestrated corporate action that benefited existing shareholders handsomely.
The Numbers That Shocked Everyone
When Bajaj Finance opened at ₹956 per share on June 16, compared to its previous close of ₹9,331, the mathematics were startling. A drop of nearly 90% would typically signal severe trouble – perhaps a major scandal, regulatory action, or catastrophic business failure.
Instead, this was simply the stock trading “ex-bonus” and “ex-stock split” for the first time. Anyone who bought shares on June 16 wouldn’t receive the corporate benefits that had already been allocated to shareholders who held the stock on June 13, 2025.
Breaking Down the Corporate Magic
Bajaj Finance had announced two powerful shareholder-friendly actions:
The 4:1 Bonus Issue: For every share you owned, the company gifted you four additional shares absolutely free. Think of it as the company saying “thank you” to loyal shareholders by increasing their stake without any additional investment.
The 1:2 Stock Split: Each existing share was divided into two new shares, with the face value dropping from ₹2 to ₹1 per share. This wasn’t the company’s first rodeo – they had executed a similar 1:5 split back in 2016.
Let’s walk through a real example. If you owned 100 shares before June 13:
- The bonus issue would give you 400 additional shares (4 for every 1)
- Your total would become 500 shares
- The stock split would then double this to 1,000 shares
Your 100 shares magically became 1,000 shares, though the per-share price adjusted proportionally to maintain the same total value.
The Reality Check: Strong Performance Underneath
Far from collapsing, Bajaj Finance actually performed well on June 16. After adjusting for the corporate actions, the stock traded relatively flat with a slight positive bias. On BSE, it closed 0.59% higher at ₹938.90, while NSE saw similar stable trading around ₹936-939 levels.
The company’s fundamentals told an even better story. Recent Q4FY25 results showed robust health:
- Net profit jumped 17% year-on-year to ₹4,480 crore, beating analyst estimates
- Revenue from operations surged to ₹18,457 crore
- Assets under management grew an impressive 26%
- New loan bookings exploded by 36% compared to the previous year
- Net interest income increased 22% to ₹9,807 crore
These aren’t the numbers of a company in distress. They’re the metrics of a financial powerhouse operating from a position of strength.
The Cherry on Top: Generous Dividends
As if the bonus shares and stock split weren’t enough, Bajaj Finance also declared substantial dividends. Shareholders received ₹44 per share as final dividend plus ₹12 per share as special dividend, totaling ₹56 per share for FY25.
For someone who held 100 shares originally, they would have received ₹5,600 in dividends alone, plus ended up with 1,000 shares post-adjustment.
Market Context: A Day of Broader Optimism
June 16 was generally positive for Indian markets. The Sensex gained 677.55 points (0.84%) to close at 81,796.15, while Nifty 50 advanced 227.90 points (0.92%) to 24,946.50. IT stocks led the rally, with all sectoral indices closing in green.
This broader market strength provided a supportive backdrop for Bajaj Finance’s adjusted trading debut.
The Flip Side: What Could Go Wrong
While the corporate actions were shareholder-friendly, investors should consider potential downsides:
Liquidity Dilution: With 10 times more shares in circulation, individual share movements might become more volatile in the short term as the market adjusts to the new supply.
Perception Issues: New investors might be confused by the adjusted price levels, potentially creating temporary demand-supply imbalances.
Execution Risk: The company now needs to maintain its growth trajectory with a much larger share base, which could pressure per-share metrics if growth slows.
Market Dynamics: NBFC stocks face ongoing regulatory scrutiny and interest rate sensitivity that could impact future performance regardless of corporate actions.
The Broader NBFC Landscape
Bajaj Finance operates in India’s competitive NBFC space, where regulatory changes, credit costs, and economic cycles significantly impact performance. While current numbers look strong, the sector faces headwinds from potential policy changes and economic uncertainty.
The company’s aggressive growth strategy, while impressive, also carries inherent risks in terms of asset quality and regulatory compliance that investors should monitor closely.
Key Takeaways for Investors
This episode offers several crucial lessons:
- Headlines Can Mislead: Always understand the context behind dramatic price movements
- Corporate Actions Matter: Bonus issues and stock splits can create apparent volatility without real value changes
- Fundamentals Trump Noise: Strong business performance ultimately drives long-term returns
- Timing Is Everything: Record dates and ex-dates significantly impact who benefits from corporate actions
The Bottom Line
Bajaj Finance’s apparent 90% crash was actually a testament to the company’s confidence in its business and commitment to shareholders. The combination of bonus shares, stock splits, and dividends represented a significant wealth transfer to existing shareholders.
However, this doesn’t automatically make it a buy. The NBFC sector remains cyclical and regulatory-sensitive. Future performance will depend on the company’s ability to maintain its growth momentum while managing credit risks effectively.
Disclaimer: This analysis is for informational purposes only and should not be considered as investment advice. Stock market investments carry inherent risks and can result in significant losses. The NBFC sector faces regulatory and economic risks that could impact performance. Readers should conduct their own research and consult qualified financial advisors before making investment decisions. Past performance does not guarantee future results. The author may or may not hold positions in the mentioned securities.
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