Introduction
Bajaj Finance Ltd. (BFL) shares appeared to crash by ~90% on stock market screens, sparking panic among retail investors. However, this dramatic drop was not a real crash—it was a technical adjustment due to a bonus issue and stock split.
This blog explains why the “plunge” is misleading, how bonus and split adjustments work, and what investors should actually focus on.
Key Corporate Actions: What Happened?
1. Stock Split (1:5)
- Pre-Split Face Value: ₹10 per share
- Post-Split Face Value: ₹2 per share
- Impact: Share price divided by 5, but number of shares held multiplied by 5.
2. Bonus Issue (1:1)
- Shareholders received 1 free share for every 1 held.
- Total shares outstanding doubled (but intrinsic value per share halved).
3. Adjustment Date: [Ex-Date, 2025]
- Markets adjusted prices to reflect these changes, creating an artificial “drop.”
Why Did the Share Price Show a 90% Fall?
Example Calculation (Simplified)
| Scenario | Before Adjustment | After Adjustment |
| Share Price | ₹10,000 | ₹1,000 (split + bonus adjustment) |
| Shares Held | 10 | 100 (10 × 5 split × 2 bonus) |
| Investment Value | ₹1,00,000 | ₹1,00,000 (No real loss!) |
The “90% drop” was just arithmetic—not an actual decline in company value.
How Stock Exchanges Adjust Prices
NSE/BSE Adjustment Formula
- Post-Split Price = (Old Price / Split Ratio) / (1 + Bonus Ratio)
- For Bajaj Finance:
- Old Price: ₹10,000
- Post-Adjustment Price: ₹10,000 / 5 / (1+1) = ₹1,000
Charts Show a Gap, But No Real Crash
- Technical charts display a price gap, but adjusted historical data ensures continuity.
Why This Is Good for Investors
1. Increased Liquidity
- Smaller share price (₹1,000 vs. ₹10,000) attracts more retail investors.
2. Psychological Advantage
- Lower nominal price makes the stock seem more affordable (even though valuation is unchanged).
3. Long-Term Value Unaffected
- No impact on:
- Revenue
- Profits
- Growth prospects
What Should Investors Do?
1. Ignore the “Plunge” Headlines
- Media often misrepresents corporate actions as crashes.
2. Check Adjusted Holdings in Demat
- Number of shares increased, but cost basis per share decreased.
3. Focus on Fundamentals
- Monitor:
- Loan book growth
- Asset quality (NPAs)
- RBI regulatory stance
Historical Precedents
1. Bajaj Finance (2018)
- Similar split (1:5) led to 650% returns in 5 years post-adjustment.
2. Tata Motors (2022)
- Post-split, shares rallied 120% in 2 years.
Conclusion: No Need to Panic
The “90% drop” in Bajaj Finance was a technical adjustment—not a fundamental collapse. Investors should stay calm, verify demat holdings, and focus on long-term growth.
Key Takeaway:
✔ “Crash” was due to split + bonus adjustments.
✔ Total investment value remains unchanged.
✔ Focus on business performance, not nominal price swings.
For Official Updates:
(Sources: Bajaj Finance filings, NSE circulars – [Date, 2025])
Have questions? Ask in comments!
Sourashis Chanda brings readers their unique perspective on Business, Economy, Health and Fitness. With a background in Health and Physical Fitness of 2years, I am dedicated to exploring [what they aim to achieve with their writing, on the sustainable Economy of the country, various pro tips about business, latest goverment news, with some tips in health are and Fitness.
- Sourashis Chandahttps://indiatadkha.com/author/sourashis/
- Sourashis Chandahttps://indiatadkha.com/author/sourashis/
- Sourashis Chandahttps://indiatadkha.com/author/sourashis/
- Sourashis Chandahttps://indiatadkha.com/author/sourashis/
