Bajaj Finance Shares in Focus Ahead of April 29 Board Meet on Stock Split, Bonus, Dividend

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Bajaj Finance Limited, one of India’s leading non-banking financial companies (NBFCS), has captured significant market attention following its announcement that its board of directors will meet on April 29, 2025, to deliberate on several shareholder-friendly proposals. These include a potential stock split, a bonus share issue, and a special interim dividend for the financial year 2024–25, alongside the approval of the company’s fourth-quarter and full-year financial results for FY25. The news, disclosed in a regulatory filing to the Bombay Stock Exchange (BSE) on April 23, 2025, has fueled optimism among investors, with the stock hitting record highs and its market capitalisation crossing ₹6 trillion. This article explores the implications of these proposed corporate actions, the company’s recent performance, market reactions, and the broader context within the NBFC sector, providing a comprehensive analysis of why Bajaj Finance shares are in the spotlight.

Bajaj Finance: A Powerhouse in India’s NBFC Sector

Bajaj Finance, a subsidiary of Bajaj Finserv, is a diversified NBFC with a robust presence across consumer finance, small and medium enterprise (SME) lending, commercial lending, and deposit-taking activities. Established in 1987, the company has grown into one of India’s largest NBFCS, offering products such as personal loans, home loans, consumer durable financing, and digital product financing. Its subsidiaries, including Bajaj Housing Finance and Bajaj Financial Securities, further strengthen its position in the financial services ecosystem.

The company’s strategic focus on digital transformation, customer acquisition, and rural market expansion has driven consistent growth. As of March 31, 2025, Bajaj Finance reported assets under management (AUM) of ₹4.17 trillion, reflecting a 26% year-on-year (YoY) increase, according to its Q4 FY25 business update. Its customer base expanded to 101.8 million, with 4.7 million new customers added in the quarter. The deposit book also grew 19% YoY to ₹71,400 crore, underscoring its ability to mobilise funds efficiently. These metrics highlight Bajaj Finance’s strong fundamentals, which have fueled investor confidence and positioned it as a key player in India’s financial services landscape.

The April 29 Board Meeting: Key Proposals

The upcoming board meeting on April 29, 2025, is poised to be a pivotal event for Bajaj Finance and its shareholders. The agenda includes three major proposals, each with significant implications for the stock’s valuation, accessibility, and investor sentiment:

1. Stock Split: The board will consider a proposal to subdivide the company’s existing equity shares, which currently have a face value of ₹2 each. A stock split reduces the face value and market price of shares by increasing the number of outstanding shares, making the stock more affordable for retail investors without altering the company’s market capitalisation or shareholders’ ownership stakes. Bajaj Finance previously executed a stock split in September 2016, reducing the face value from ₹10 to ₹2, which enhanced liquidity and broadened its investor base.
2. Bonus Share Issue: The board will evaluate a proposal to issue bonus shares, which are additional shares distributed to existing shareholders at no cost, typically funded by the company’s accumulated reserves. Bajaj Finance last issued bonus shares in a 1:1 ratio in September 2016, rewarding shareholders and signalling confidence in future growth. A bonus issue increases the total number of shares outstanding, potentially improving liquidity and reducing the per-share price.
3. Special Interim Dividend: The board will consider declaring a special interim dividend for FY25, providing shareholders with a portion of the company’s profits ahead of the final dividend announcement. Bajaj Finance has a history of consistent dividend payouts, with a final dividend of ₹36 per share (1800% on a face value of ₹2) declared on June 21, 2024. The proposed interim dividend reflects the company’s strong cash flows and commitment to enhancing shareholder value.

These proposals, if approved, will require shareholder approval and compliance with the Companies Act, 2013, and the Securities and Exchange Board of India (SEBI) regulations, including the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. The announcement has already sparked significant market interest, with investors and analysts closely monitoring the outcomes.

Market Reaction and Stock Performance

The announcement of the board meeting triggered a strong market response, with Bajaj Finance’s shares scaling a record high of ₹9,709.75 on the BSE during intraday trading on April 24, 2025, surpassing its previous high of ₹9,340 on April 23. The stock closed at ₹9,326.25 on April 23, up 0.64%, and gained further traction the following day, rising 1.6% to ₹9,473.80 by 9:16 AM on April 24. The rally pushed the company’s market capitalisation past ₹6 trillion, a milestone that underscores its status as one of India’s most valuable NBFCS.

The stock’s performance reflects robust investor optimism. Year-to-date (YTD) in 2025, Bajaj Finance has delivered a 35% return, adding over ₹1.5 lakh crore to investor wealth. Over the past two years, the stock has surged 57%, while its five-year return stands at an impressive 329%, making it a multibagger for long-term investors. The stock’s one-year beta of 1.1 indicates high volatility, but its relative strength index (RSI) of 65.8 suggests it is neither overbought nor oversold, providing room for further upside.

Analysts attribute the rally to the anticipated corporate actions, which are expected to enhance liquidity, attract retail investors, and signal management’s confidence in sustained growth. Posts on X reflect similar sentiment, with users like @yatinmota and @MrTalkStock highlighting the potential for a “cheaper” Bajaj Finance post-split, making it more accessible to retail investors. However, some caution that the stock’s high valuation, trading at 6.55 times its book value, warrants careful consideration.

Understanding the Corporate Actions

To appreciate the significance of the proposed actions, it’s essential to understand their mechanics and impact:

Stock Split

A stock split involves dividing existing shares into multiple shares with a lower face value, reducing the per-share price proportionally. For example, a 5:1 split would reduce the face value from ₹2 to ₹0.40, and a shareholder owning 100 shares at ₹9,326 would hold 500 shares at approximately ₹1,865.20 post-split, assuming no other market factors. The total value of the holding remains unchanged, but the lower price enhances liquidity and attracts smaller investors. Bajaj Finance’s high share price, averaging ₹9,278.50 in April 2025, makes a split appealing to broaden its investor base.

Bonus Share Issue

A bonus issue involves issuing additional shares to shareholders using the company’s free reserves. For instance, a 1:1 bonus issue would double the number of shares held, with the share price adjusting downward to maintain the same market capitalisation. If a shareholder owns 100 shares at ₹9,326, a 1:1 bonus would result in 200 shares at approximately ₹4,663, assuming no market-driven price changes. Bonus issues reward shareholders and signal strong financial health, as they require substantial reserves.

Interim Dividend

An interim dividend is a payout made before the final dividend for the fiscal year, reflecting the company’s ability to generate surplus cash. Bajaj Finance’s proposed special interim dividend, if approved, would provide immediate returns to shareholders. The amount and record date will be critical, as investors holding shares on the record date will be eligible. The company’s past dividend of ₹36 per share in FY24 suggests a generous payout is possible, further boosting investor confidence.

Analyst Perspectives and Target Prices

Brokerages have expressed bullish outlooks on Bajaj Finance, citing its robust business model and growth prospects. CLSA has a target price of ₹11,000, while Elara Capital projects ₹11,161, forecasting a 25% AUM compound annual growth rate (CAGR) over FY24–27. Ventura Securities initiated coverage with a “Buy” rating and a target of ₹10,205, highlighting the company’s expansion in rural markets and market share gains in personal loans. Geojit BNP Paribas set a target of ₹9,521, suggesting a 6.85% upside from current levels.

Technical analysts, such as Ganesh Dongre from Anand Rathi, note a bullish reversal pattern, with a potential target of ₹9,600 in the near term. However, some caution against the stock’s high price-to-earnings (P/E) ratio of 26.40, compared to the sector’s 29.99, and its low interest coverage ratio, which could pose risks in a rising interest rate environment.

Bajaj Finance’s Financial Performance

Bajaj Finance’s Q4 FY25 business update, released on April 3, 2025, provides context for the board’s confidence in proposing these actions. Key highlights include:

• AUM Growth: AUM grew 26% YoY to ₹4.17 trillion, driven by strong demand in consumer finance and SME lending.
• Customer Acquisition: The company added 4.7 million customers, reaching a total of 101.8 million, reflecting its focus on digital onboarding and rural expansion.
• Deposit Growth: The deposit book expanded 19% YoY to ₹71,400 crore, supporting its lending operations.
• Profitability: While Q4 FY25 financial results are pending, the company reported a net profit of ₹4,246.54 crore for Q3 FY25 (ending December 31, 2024), with annual profits for FY24 at ₹14,451.17 crore.

These metrics underscore Bajaj Finance’s ability to sustain growth despite macroeconomic challenges, such as rising interest rates and regulatory scrutiny on NBFCS. The company’s diversified portfolio and digital capabilities position it to capitalise on India’s growing credit demand.

Implications for Shareholders

The proposed corporate actions have several implications for shareholders:

1. Enhanced Liquidity: A stock split and bonus issue will increase the number of shares outstanding, improving trading volumes and making the stock more accessible to retail investors.
2. Wealth Creation: The interim dividend provides immediate returns, while the bonus issue and potential capital appreciation post-split could enhance long-term wealth.
3. Market Sentiment: The actions signal management’s confidence in sustained growth, likely boosting investor sentiment and attracting institutional interest.
4. Volatility Risks: The stock’s high beta of 1.1 suggests potential volatility, especially if the board’s decisions fall short of market expectations.

Shareholders must hold shares on the record date (to be announced post-approval) to be eligible for the split, bonus, and dividend. Past corporate actions, such as Bajaj Finance’s 2016 bonus and split, took 1–15 days to credit shares to demat accounts, so investors should plan accordingly.

Broader Industry Context

Bajaj Finance’s moves come at a time when India’s NBFC sector is navigating opportunities and challenges. NBFCS have gained market share in personal and consumer loans, driven by digital lending platforms and increasing credit penetration in rural areas. However, regulatory changes, such as the Reserve Bank of India (RBI)’s stricter norms on capital adequacy and risk weights, pose challenges. Rising interest rates could also pressure margins, particularly for NBFCS with lower interest coverage ratios like Bajaj Finance.

Competitors like Mahindra & Mahindra Financial Services and Shriram Finance are also focusing on digital transformation and rural expansion, intensifying competition. However, Bajaj Finance’s diversified portfolio, strong brand, and technological edge give it a competitive advantage. The company’s ability to maintain AUM growth and profitability in a challenging environment positions it as a leader in the sector.

Risks and Considerations

While the proposed actions are positive, investors should consider several risks:

1. High Valuation: The stock’s P/E ratio of 26.40 and price-to-book ratio of 6.55 suggest a premium valuation, which could limit upside if growth slows.
2. Regulatory Risks: Tighter RBI regulations could impact profitability and capital requirements.
3. Macroeconomic Headwinds: Rising interest rates and global economic uncertainties could affect consumer borrowing and loan growth.
4. Execution Risks: Delays in implementing the split or bonus issue, or a lower-than-expected dividend, could disappoint investors.

Conclusion

Bajaj Finance’s announcement that its board will consider a stock split, bonus issue, and special interim dividend on April 29, 2025, has placed its shares firmly in the spotlight. The proposed actions, if approved, will enhance liquidity, reward shareholders, and signal confidence in the company’s growth trajectory. With a stellar track record—35% YTD returns, 57% over two years, and 329% over five years—Bajaj Finance remains a favourite among investors, supported by its robust AUM growth, customer acquisition, and digital innovation.

The board meeting’s outcomes will be closely watched, as they could further propel the stock’s rally or introduce volatility if expectations are unmet. For now, the market’s bullish response, backed by positive analyst targets and enthusiastic social media sentiment, underscores Bajaj Finance’s appeal. As India’s NBFC sector evolves, Bajaj Finance’s strategic moves position it to capitalise on long-term opportunities, making it a stock to watch in the coming weeks.