Bajaj Finserv share jumps 9% on bonus, stock split plan; Q1 profit zooms 159%

Shares of Bajaj Finserv rallied over 9% in intraday trade on the BSE on Thursday after the company registered robust growth in the June quarter earnings. The board of the non-banking financial services company (NBFC) also approved the proposal to split equity shares and issue fully-paid bonus shares to the members of the company.

Boosted by strong Q1 results, Bajaj Finserv share price gained as much as 8.8% to hit an intraday high of ₹14,475 on the BSE. The stock opened higher at ₹13,500, against the previous closing price of ₹13,303.15. The stock has gained more than 14% in the last three days after the company in an exchange filing on June 26 unveiled a plan to split shares and issue bonus shares to eligible shareholders.

The stock has rebounded 23% from its 52-week low of ₹10,777 touched on July 1, 2022, while it hit a 52-week high of ₹19,319.95 on October 19, 2021. The index heavyweight has fallen more than 25% this year, despite 26% gain in the past one month and over 12% in the last one week. In the last one year, the stock has delivered a muted return of 3.4% to its shareholders, underperforming the benchmark Sensex by 4.65%.

Technically, the stock moves in a ‘mildly bearish’ from ‘bearish’ range, trading higher than 5-day, 20-day, 50-day, and 100-day moving averages, but lower than 200-day average.

Q1 profit surges 159%

Bajaj Finserv has reported the highest ever quarterly consolidated profit after tax of ₹2,596 crore in the first quarter ended June 30, 2022, compared to ₹1,002 crore in the same period last year, up 159% on year-on-year (YoY) basis. The consolidated total income grew 14% to ₹15,888 crore, from ₹13,949 crore in the corresponding period last year. The consolidated assets under management (AUM) crossed a milestone of ₹200,000 crore in Q1 FY23 and stood at ₹204,018 crore.

On the asset quality front, gross NPA and Net NPA stood at 1.25% and 0.51%, respectively, as against 2.96% and 1.46% in the year-ago period. As of June 30, 2022, capital adequacy ratio (including Tier-II capital) stood at 26.16%, while the Tier-I capital stood at 23.84%.

Board approves stock split, bonus issue

The board of the company approved the sub-division of equity shares of face value of ₹5 each into five equity shares of value of ₹1 fully paid-up to increase the participation of small investors in the company. The company will complete the process on or before September 26, 2022, subject to necessary regulatory approvals.

The company said that the firm has grown significantly, in terms of business and performance, over the years, which is reflected in the share price of the company, which touched a peak of ₹19,325 in October 2021. The price since then has hovered around ₹12,200.

“Currently the retail/individual shareholders comprise 98% of the total number of shareholders holding around 17.52% of paid-up value of shares. Amongst its peers, the share price of the company is one of the highest while having one of the smallest capital bases. As and when the stock price rises further, it will be increasingly difficult for small potential shareholders to partake in the company's future,” Bajaj Finserv said in a release.

Bajaj Finserv’s board also gave a nod to the issue of one bonus equity share of the face value of ₹1 for every one fully paid-up equity share of ₹1.