Bajaj Finance Falls Ahead of Q4 Results; Stock Split, Bonus & Dividend Announced

Bajaj Finance Limited, a leading non-banking financial company (NBFC) in India, has been a cornerstone of the country’s financial services sector, offering a diverse portfolio of lending and deposit products. On April 29, 2025, the company’s shares came under selling pressure, declining by as much as 1.44% to ₹8,960.80 on the Bombay Stock Exchange (BSE) ahead of its fourth-quarter (Q4 FY25) results announcement. The board meeting, scheduled for the same day, is set to consider not only the financial results for the quarter and fiscal year ended March 31, 2025, but also significant shareholder-friendly proposals: a special interim dividend, a stock split, and a bonus share issue. These developments have sparked intense debate among investors and analysts about whether the recent dip in Bajaj Finserv’s share price presents a buying opportunity before the anticipated announcements. This article examines the company’s recent performance, the reasons behind the share price decline, the potential impact of the proposed corporate actions, and whether now is the right time to invest.

Bajaj Finance: A Snapshot of a Financial Giant

Bajaj Finance, a subsidiary of Bajaj Finserv, is one of India’s largest and most diversified NBFCS, with a market capitalisation of approximately ₹5.63 lakh crore as of April 28, 2025. Incorporated in 1987, the company initially focused on two- and three-wheeler financing but has since expanded into consumer finance, personal loans, home loans, SME lending, commercial lending, and deposit-taking activities. Its subsidiaries, including Bajaj Housing Finance and Bajaj Financial Securities, enhance its presence across the financial services spectrum.

The company’s strategic emphasis on digital transformation, rural market penetration, and customer acquisition has driven robust growth. As per its Q4 FY25 business update, Bajaj Finance reported assets under management (AUM) of ₹4.17 trillion, a 26% year-on-year (YoY) increase, and a customer base of 101.8 million, with 4.7 million new customers added in the quarter. Its deposit book grew 19% YoY to ₹71,400 crore, reflecting strong funding capabilities. These metrics underscore Bajaj Finance’s ability to thrive in a competitive market, making its upcoming board meeting a focal point for investors.

The April 29 Board Meeting: What’s on the Table?

The board meeting on April 29, 2025, is poised to be a landmark event, with several key proposals under consideration:

1. Q4 FY25 Financial Results: The board will approve the audited financial results for the quarter and fiscal year ended March 31, 2025. Analysts expect a strong performance, with net profit projected to rise 18.1% YoY to ₹4,518 crore from ₹3,825 crore in Q4 FY24, driven by healthy loan growth and stable credit costs. Net interest income (NII) is anticipated to grow 23% YoY to ₹9,814 crore, supported by a robust loan book expansion.
2. Special Interim Dividend: The board will consider declaring a special interim dividend for FY25, providing shareholders with a portion of profits ahead of the final dividend. Bajaj Finance has a history of generous payouts, with a final dividend of ₹36 per share (1800% on a face value of ₹2) declared on June 21, 2024. The dividend yield currently stands at 0.4%.
3. Stock Split: A proposal to subdivide the company’s equity shares, currently with a face value of ₹2 each, is on the agenda. A stock split, potentially in a 1:1 ratio (splitting one ₹2 share into two ₹1 shares), aims to reduce the per-share price, enhancing liquidity and making the stock more accessible to retail investors. The last split occurred in 2016, reducing the face value from ₹10 to ₹2.
4. Bonus Share Issue: The board will evaluate issuing bonus shares, distributing additional shares to existing shareholders at no cost, funded by the company’s reserves. The last bonus issue, in a 1:1 ratio, was in September 2016. A bonus issue increases the number of shares outstanding, potentially improving trading volumes.

These proposals, subject to shareholder approval and compliance with the Companies Act, 2013 and Securities and Exchange Board of India (SEBI) regulations, have heightened anticipation in the market.

Why Did Bajaj Finance Share Price Fall?

Despite the positive buzz surrounding the board meeting, Bajaj Finance shares experienced selling pressure on April 29, 2025. Several factors contributed to the decline:

1. Pre-Results Jitters: Share prices often face volatility ahead of earnings announcements due to uncertainty about performance. Bajaj Finance shares fell 0.86% to ₹9,013.50 by 10:15 AM on the BSE, after hitting an intraday low of ₹8,960.80, down 1.44% from the previous close of ₹9,093. The stock had been under pressure for four consecutive days, losing 4% in the period, reflecting cautious investor sentiment.
2. Profit-Taking After Recent Rally: The stock had rallied significantly, hitting a 52-week high of ₹9,709.75 on April 24, 2025, following the announcement of the board meeting. Year-to-date (YTD), Bajaj Finance delivered a 21% return, adding over ₹1.5 lakh crore to investor wealth, with a 30% gain over one year and 113% over five years. The recent dip may reflect profit-taking by investors locking in gains after the sharp run-up.
3. Market Dynamics: Broader market trends, including volatility in the Nifty 50 index, influenced the stock’s performance. On April 29, the Nifty 50 advanced 0.62%, but sector-specific concerns, such as regulatory scrutiny on NBFCS, may have weighed on Bajaj Finance. The Reserve Bank of India (RBI) recently issued a letter of displeasure regarding operational lapses in Bajaj Finance’s co-branded credit card business, raising concerns about customer risks.
4. Valuation Concerns: Trading at a price-to-earnings (P/E) ratio of 26.40, compared to the sector’s 29.99, and a price-to-book ratio of 6.48, Bajaj Finance is considered richly valued. Some analysts caution that the stock’s premium valuation may limit upside if earnings growth slows or credit costs rise.

Q4 FY25 Results Preview: What to Expect

Analysts are optimistic about Bajaj Finance’s Q4 FY25 performance, driven by its diversified portfolio and strong execution. Key expectations include:

• Net Profit: A projected 18.1% YoY increase to ₹4,518 crore, compared to ₹3,825 crore in Q4 FY24, supported by healthy loan growth and stable asset quality.
• Net Interest Income (NII): Expected to rise 23% YoY to ₹9,814 crore from ₹8,013 crore, driven by a 26% AUM growth. However, net interest margins (NIM) are estimated to contract by 5 basis points sequentially to 9.65% due to rising funding costs.
• Credit Costs: Anticipated to decline 5 basis points quarter-on-quarter (Qoq) to 2.05%, reflecting improved asset quality. Gross non-performing assets (NPA) stood at 1.12% in Q3 FY25, slightly up from 1.06%, with net NPA at 0.48%.
• Loan Book Growth: The company’s focus on consumer finance, SME lending, and rural markets is expected to sustain double-digit loan growth, with AUM reaching ₹4.17 trillion.

Management commentary on asset quality trends, credit costs, and NIM trajectory will be closely watched, as these factors will influence the stock’s outlook. The Q3 FY25 results, announced in January 2025, showed a 17% YoY rise in consolidated net profit to ₹4,246 crore and a 23% increase in NII to ₹9,382 crore, setting a high bar for Q4.

Implications of the Proposed Corporate Actions

The proposed stock split, bonus issue, and interim dividend have significant implications for shareholders:

1. Stock Split: A 1:1 split would reduce the face value from ₹2 to ₹1, halving the per-share price (e.g., from ₹9,013 to approximately ₹4,506.50, assuming no market-driven changes). This enhances liquidity and attracts retail investors, as seen in the 2016 split, which boosted trading volumes.
2. Bonus Issue: A 1:1 bonus issue, as in 2016, would double the number of shares held, reducing the per-share price proportionally (e.g., from ₹9,013 to ₹4,506.50 for a 1:1 bonus). This rewards shareholders and signals confidence in future growth, leveraging the company’s strong reserves.
3. Interim Dividend: A special interim dividend, potentially matching or exceeding the ₹36 per share paid in FY24, would provide immediate returns. The record date, to be announced post-approval, will determine eligibility, requiring investors to hold shares on that date.

These actions are expected to improve the stock’s affordability and liquidity, potentially driving demand from retail and institutional investors. However, the market’s reaction will depend on the specifics of the announcements and the Q4 results.

Is It Time to Buy Bajaj Finance Shares?

The recent share price dip has sparked debate about whether now is an opportune moment to invest, especially with the dividend, stock split, and bonus issue on the horizon. Here’s a balanced analysis:

Reasons to Buy

1. Strong Fundamentals: Bajaj Finance’s 26% AUM growth, expanding customer base, and diversified portfolio position it as a leader in the NBFC sector. Its focus on digital lending and rural markets aligns with India’s growing credit demand.
2. Corporate Actions: The proposed stock split and bonus issue will make the stock more accessible, potentially driving demand. The interim dividend offers immediate returns, enhancing shareholder value.
3. Positive Technical Outlook: Analysts note that Bajaj Finance has broken out of a four-year consolidation phase, with a bullish trend. A “buy on dips” strategy is recommended, with support levels at ₹8,800–₹9,000 and resistance at ₹9,600. The stock’s relative strength index (RSI) of 65.8 suggests it is not overbought.
4. Analyst Optimism: Brokerages like CLSA (target: ₹11,000), Elara Capital (₹11,161), and Ventura Securities (₹10,205) remain bullish, citing a 25% AUM CAGR over FY24–27. Of 33 analysts, 23 recommend a “Buy” or “Strong Buy,” with an average target of ₹9,045.52.
5. Historical Performance: The stock has delivered a 21% YTD return, 30% over one year, and 113% over five years, making it a multibagger. The recent dip may offer an entry point for long-term investors.

Reasons to Exercise Caution

1. Premium Valuation: The stock’s P/E ratio of 26.40 and price-to-book ratio of 6.48 indicate a high valuation, which could cap upside if earnings disappoint or credit costs rise.
2. Regulatory Risks: The RBI’s concerns about operational lapses in the co-branded credit card business could lead to stricter oversight, impacting growth. Regulatory changes, such as higher capital requirements for NBFCS, pose additional risks.
3. Macroeconomic Headwinds: Rising interest rates and global economic uncertainties could affect consumer borrowing and loan growth, pressuring margins. The low interest coverage ratio is a concern in a rising rate environment.
4. Volatility Risk: The stock’s one-year beta of 1.1 indicates high volatility, and a failure to meet market expectations on Q4 results or corporate actions could trigger further selling.
5. Profit-Taking Pressure: The stock’s 4% decline over four days suggests profit-taking, which may continue if the board’s announcements fall short of expectations.

Market and Investor Sentiment

The market’s response to the board meeting announcement has been mixed. On April 24, 2025, Bajaj Finance shares surged 4.11% to a 52-week high of ₹9,709.75, reflecting optimism about the corporate actions. However, the subsequent four-day decline indicates caution ahead of the results. At 10:50 AM on April 29, the stock traded at ₹9,018 on the National Stock Exchange (NSE), down 0.82%.

Broader Industry Context

Bajaj Finance operates in a dynamic NBFC sector, where digital lending and rural expansion are driving growth. However, challenges like rising interest rates, regulatory scrutiny, and competition from peers like Shriram Finance and Power Finance Corporation persist. The RBI’s tighter norms on risk weights and capital adequacy could pressure margins, but Bajaj Finance’s diversified portfolio and technological edge provide a competitive advantage.

The broader market environment, marked by geopolitical tensions and FII selling, adds volatility. On April 29, 2025, over 180 companies, including Bharat Petroleum Corporation and Trent, reported Q4 results, contributing to market uncertainty. Bajaj Finance’s ability to deliver strong earnings and execute its corporate actions will be critical in distinguishing it from its peers.

Strategic Considerations for Investors

Investors considering Bajaj Finance shares should weigh the following:

1. Long-Term Perspective: The stock’s historical performance and growth prospects make it appealing for long-term investors. The corporate actions could enhance returns over time.
2. Timing the Entry: The current dip to ₹9,013.50, near the support level of ₹8,800–₹9,000, may offer a buying opportunity, especially if the Q4 results meet expectations and the corporate actions are approved.
3. Risk Management: Given the stock’s volatility and valuation, investors should avoid overexposure and consider staggered purchases. Consulting a certified financial advisor is advisable.
4. Monitor Announcements: The specifics of the dividend, split ratio, and bonus issue will influence the stock’s trajectory. Investors should track the record date to ensure eligibility.

Conclusion

Bajaj Finance’s share price dip ahead of its Q4 FY25 results on April 29, 2025, reflects pre-earnings caution and profit-taking after a strong rally. The board’s consideration of a special interim dividend, stock split, and bonus issue has heightened investor interest, with the potential to enhance liquidity and shareholder value. Expected to report an 18.1% YoY profit growth to ₹4,518 crore and 23% NII growth, Bajaj Finance remains a fundamentally strong NBFC, supported by robust AUM growth and a diversified portfolio.

For investors, the current dip may present a buying opportunity, particularly for those with a long-term horizon, given the stock’s bullish technical outlook and analyst optimism. However, risks such as high valuation, regulatory pressures, and macroeconomic challenges warrant caution. The board meeting’s outcomes will be pivotal in determining the stock’s near-term trajectory. Investors should stay tuned for the official announcements and consult financial advisors to align their decisions with their risk profiles and goals. Bajaj Finance’s strategic moves, if executed well, could reinforce its position as a market leader, making it a stock to watch in the NBFC space.