Shares of Bajaj Finserv, the holding company for the various financial services businesses under the Bajaj Group, were trading ex-split today. The stock was the top gainer on Sensex and Nifty. Reacting to the development, Zerodha founder and CEO Nithin Kamath took to Twitter to explain how does a stock split affects investors and the scrip of the company.

Kamath said everytime a company announces a stock split, there is panic or greed among many investors because they think that the stock has become cheaper. "Every time a popular stock goes ex-bonus/split & the price drops on ex-date, there is panic or greed among many investors because they think they've made a loss or that the stock has become cheaper.," Nithin Kamath tweeted.

In another tweet, the Zerodha chief said that bonus or split is like having 2 chocolates of 50 gms instead of 1 of 100 gms. Makes no difference. Earlier, Bajaj Finserv fixed September 14, 2022 as the 'record date' for its stock split and bonus shares issue. While declaring its Q1FY23 results, the company said that its board also approved the proposal of stock split or sub division of equity shares in the ratio of 1:5 as well as gave its nod for the issuance of bonus shares in the ratio of 1:1. The stock traded ex-split and ex-bonus today.

Companies conduct stock splits primarily to make their shares more affordable for investors. On the ex-split date, the historical data for the share get adjusted for the stock split. However market cap of the firm remains the same.

In today's trade, shares of Bajaj Finserv were the top Sensex and Nifty gainers after the stock turned ex-split. Additionally, the firm was also trading ex-bonus that was announced in the ratio of 1:1. On Sensex, Bajaj Finserv stock gained up to 7.59 per cent to Rs 1,846 against the previous close of Rs 1,715. On Nifty, stock of Bajaj Finserv rose up to 7.64 per cent to Rs 1,844. It was the top gainer on Nifty.

The company on July 28 this year said its board of directors announced a stock split and bonus issue of equity shares. Board of the company cleared the sub-division of equity shares in 1:5 ratio.
Source: BusinessToday
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