Bajaj Finance Ltd., a leading non-banking financial company (NBFC) in India, announced a 4:1 bonus issue and stock split from face value Rs. 2 to Rs. 1. The record date for the stock split and bonus issue is 16th June, 2025.

Stock Split

A stock split divides each share into two, reducing the face value from ₹2 to ₹1. For example:

If you have 10 shares, the split doubles them to 10 × 2 = 20 shares.

Bonus Issue

A 4:1 bonus issue means shareholders receive 4 additional shares for every 1 share held. For example:

If you own 10 shares, you get 40 bonus shares.

Total shares post-bonus: 10 + 40 = 50 shares.

Combined Effect

The bonus and split together multiply your shares by 10:

Start with 1 share → Split gives 2 shares → Bonus gives 2 × 5 = 10 shares.

If you have 10 shares in your portfolio, post bonus and split, your portfolio will reflect 100 shares. (10 × 2 × 5)

Impact on Portfolio

When bonus shares are issued by the company, the total invested value of the stock remains unchanged. In case of bonus shares issues by Bajaj Finance Limited, additional shares will be credited to the customer’s account within 2 weeks from the record date. Stock price will fall by 1/10th thereby impacting your holdings value. Until then, the portfolio will show a temporary drop in P&L. Once bonus shares are credited, the P&L will adjust to its correct value.

Impact on Shares as Margin

1. There will be an increase in the haircut percentage which will impact margin generated. The increase in haircut percentage will lower the margin generated initially thereby requiring additional margin for open position in MTF/F&O/Commodity to maintain positions.

2. The haircut percentage of Bajaj Finance Limited (BAJFI) in Shares as Margin will be increased as follows: 50% on June 9, 99% on June 10 and 100% on Jun 12, 2025 EOD.

Impact on Margin Trading Facility (MTF)

If you hold Bajaj Finance Limited (BAJFI) shares in MTF, you will have to convert those shares to delivery by 12:30 PM on 13th June, 2025. All MTF positions that are held after this timeframe will be automatically squared off.

Impact on Futures and Options

Strike Price: The adjusted strike price will be arrived at by dividing the old strike price by the adjustment factor i.e., 10.

Lot Size: The adjusted lot size will be arrived at by multiplying the old market lot by the adjustment factor.

Old lot size=125

Adjustment factor = 10

New lot size = 125×10 = 1250

Note: The lot size for the contracts expiring 31st July onwards will change from 75 to 750 as per the NSE/FAOP67372.

Value of Position:

Pre-bonus Value of Options: ₹1500 (premium) × 125 (shares) = ₹187,500

Post-bonus Value of Options: ₹150 (premium) × 1250 (shares) = ₹187,500

Like Futures, the notional value of your Options position remains the same at ₹187,500.

You can calculate the new future price as follow:

= (Closing price / Adjustment factor) × New lot size

= (Closing price / 10) × 1250

Key consideration – There will be no change in your overall exposure or margin requirement. The price decreases and the lot size increase, keeping the contract value constant.

*It is important to note that the prices quoted are as a part of example and do not reflect the market data.