Bajaj Finance shares didn’t crash 90%! Here’s what a stock split and bonus really mean

Investors in blue-chip Nifty stock Bajaj Finance were in for a momentary shock this morning when their demat accounts reflected a sharp 90% drop in holding value.

However, the dip was simply due to the stock split and bonus issue—both of which will be credited in due course.

Bajaj Finance had approved two corporate actions aimed at benefiting its shareholders. First, the company issued bonus shares in a 4:1 ratio, meaning shareholders will receive four additional shares for every one share they currently hold.

Second, it announced a stock split in a 1:2 ratio, where each existing share with a face value of Rs 2 will be split into two shares with a face value of Re 1 each.

So, how does it affect your investment?

Bonus Issue

Suppose you own 1 share of Bajaj Finance.
With a 4:1 bonus issue, you receive 4 additional shares for every 1 share you hold.

So:
1 (existing) × 4 = 4 bonus shares

After the bonus issue, your total holding becomes:
1 + 4 = 5 shares

Stock Split

Next, Bajaj Finance shares underwent a 1:2 stock split, meaning each of your 5 shares will be split into 2.

So:
5 × 2 = 10 shares after the split

Final Outcome

Your original 1 share has now become 10 shares.

However, it's important to note that the total value of your investment remains unchanged initially, as the share price is adjusted proportionately to reflect the increased number of shares.

Bajaj Finance has stated that the bonus issue and stock split process will be completed by June 27. Once this is done, your updated shareholding will be reflected in your Demat account.

So, if you currently hold 1 share, you’ll see 10 shares in your account when you log in on June 27.

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