Recently, many investors were shocked to see headlines claiming that Bajaj Finance share price fell by nearly 90% after a bonus issue and stock split. At first glance, this kind of drop looks scary and can trigger panic selling, especially among new investors. But in reality, this fall is not a loss in value—it’s a technical adjustment.
Let’s break this down in simple language so you can clearly understand what actually happened, why the share price fell on paper, and what it means for your investment.
What Happened to Bajaj Finance Share Price?
Bajaj Finance announced a bonus issue along with a stock split. After this corporate action came into effect, the share price appeared to drop by around 90%.
This sudden fall was not due to poor financial performance, bad results, or negative business news. It happened purely because of price recalculation after the bonus and stock split.
In stock market terms, this is completely normal.
Understanding Bonus Issue in Simple Words
A bonus issue means a company gives extra shares to existing shareholders for free.
For example:
- If the bonus ratio is 4:1, you get 4 additional shares for every 1 share you already own.
- Your total number of shares increases, but the overall value of your holding remains the same.
Because more shares are now available, the price per share adjusts downward accordingly.
What Is a Stock Split?
A stock split divides one share into multiple smaller shares.
For instance:
- If a stock with a face value of ₹10 is split into ₹1 face value shares,
- One old share becomes 10 new shares.
Again, the price per share falls, but the total investment value stays unchanged.
Why Did the Share Price Look Like It Fell 90%?
When both bonus issue and stock split are applied together, the adjustment in price can look dramatic.
Here’s a simple example:
- Suppose Bajaj Finance share price was ₹7,000 before the corporate action.
- After bonus shares and stock split, the price may adjust to around ₹700 or even lower.
- This creates an optical illusion of a 90% fall, even though nothing negative has happened.
Your number of shares increases in the same proportion, so your total portfolio value remains almost the same.
Did Investors Actually Lose Money?
No, investors did not lose money because of this adjustment alone.
If you held:
- 1 share worth ₹7,000 earlier
After bonus and split, you might now hold: - 10 or more shares worth ₹700 each
Your total investment value remains close to ₹7,000, ignoring minor market fluctuations.
Why Companies Do Bonus Issues and Stock Splits
Companies like Bajaj Finance use bonus issues and stock splits for several positive reasons:
1. Improve Liquidity
Lower share prices make stocks more affordable for retail investors, increasing daily trading volume.
2. Reward Long-Term Shareholders
Bonus shares act as a reward for investors who stay invested for the long term.
3. Increase Market Participation
A lower share price attracts more small investors, expanding the shareholder base.
4. Show Confidence in Business
Such corporate actions often signal management’s confidence in future growth.
Impact on Long-Term Investors
For long-term investors, a bonus issue and stock split are usually positive events.
- You own more shares than before
- Entry price looks lower for new investors
- Liquidity improves
- Long-term growth potential remains unchanged
If the company’s fundamentals are strong, these actions do not harm your investment.
Should You Buy or Sell After Such a Price Fall?
A decision to buy or sell should never be based only on share price movement after a split or bonus.
Instead, investors should analyze:
- Company earnings growth
- Loan book expansion
- Asset quality
- Management guidance
- Overall market conditions
The adjusted price is not a signal of weakness—it’s just a mathematical recalculation.
Common Mistake New Investors Make
Many new investors see a huge percentage drop and assume something has gone wrong. This misunderstanding can lead to panic selling.
Always remember:
- Corporate actions change price, not value
- Focus on market capitalization and fundamentals, not just price per share
Final Thoughts
The news about Bajaj Finance share price falling 90% after bonus issue and stock split may sound alarming, but it is misleading without context. This fall is technical, expected, and neutral in nature.
Bajaj Finance remains one of India’s well-known NBFCs, and such corporate actions are usually taken to improve accessibility and liquidity in the stock.
As an investor, staying informed and understanding these adjustments is far more important than reacting emotionally to headlines.