Here is why Bajaj Finserv’s share price is rocketing higher

Bajaj Finserv, the third-largest non-banking, non-insurance financial services company in the country, saw its share price rocket on Tuesday. The share price was up over 6% to Rs 13,417 each in mid-day trades.

This comes after the stock came under heavy battering after hitting a peak along with the benchmark indices last October. The company had seen its share price value sink by over 40% since then only to see some rise over the last three weeks.

Bajaj Finserv is the financial holding company of various group businesses: NBFC (Bajaj Finance), life insurance (Bajaj Life Insurance) and general insurance (Bajaj General Insurance). So, it does get the holding company discount on the bourses. Indeed, its own subsidiary, Bajaj Finance, commands a market value almost twice.

So, what set the stock on fire?

The company said today that its scheduled board meeting later this month will take upon a long-awaited proposal to bring liquidity to the stock. Along with the quarterly results that would be declared on Thursday, July 28, the board will also consider a proposal for sub-division of equity shares of the company and/or issue of bonus shares to the shareholders.

The result of one or both the proposals would be bringing more liquidity to the stock that has a minimum ticket size of well over Rs 13,000 each.

While for large investors such pricing does not make much of a difference, a lower market price does tend to make such stocks more accessible to small retail investors. Either way, stock splits and bonus share announcements do tend to bring some excitement to the market and the company did see investors flocking to the counter on the proposal.

The stock was value topper as of mid-day trades with shares worth Rs 1,400 crore changing hands on Tuesday.

Given that the shares have a face value of Rs 5, at the current price, only a stock split which can take it to Re 1 each, would mean the adjusted stock market price of around Rs 2,650-2,700 a share.

While this would make it more accessible a price for small shareholders, the company may twine it with a bonus share issue to bring the market price under Rs 1,000 each, making it even juicier.