HDFC Bank on July 16 said that it will be considering a bonus issue of shares during its board meet which is scheduled on July 19. If approved, this would mark the first ever bonus issue of shares announced by India's largest private lender.
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A company announces bonus issue of shares to reward its existing shareholders with an investment opportunity, which is perceived to be attractive. While the issue of bonus shares increases the total number of shares issued and owned, it does not change the market capitalization of the company. This increases the overall liquidity of the stock, and makes it more affordable for other investors to add to their portfolio, creating strong upside potential for the stock.
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The issuance of bonus shares will likely increase investors' confidence for the stock, as it reflects on the firm's strong financials and growth potential. Bonus issue essentially are free shares offered by a company from its reserves. Investors must own shares of the company as on the record date to be eligible for the bonus issue.
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The earlier corporate action taken by the HDFC Bank apart from dividend announcements included stock splits in 2019 and 2011. In 2019, it had announced a stock split in the ratio of 1:2. In 2011, the private lender announced a stock split in 1:5 ratio.
Along with the bonus issue, the private lender will also consider and approve a dividend. Earlier this year, the company paid a dividend of Rs 22 per share to its eligible shareholders, as on the record date of June 27.
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During its board meeting, HDFC Bank will consider and approve its results for the first quarter of the financial year 2025. Earlier in April, HDFC Bank had reported a standalone net profit of Rs 17,616 crore for the fourth quarter of the previous financial year, 2025. This marked a 6.7 percent rise from the net profit reported in the year-ago period, surpassing Street expectations.
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Gross non-performing asset (NPA) ratio of the bank shrunk to 1.33 percent as on March 31, 2025, as compared to 1.42 percent as on December 31, 2024. However, it expanded from 1.24 percent a year ago. Similarly, Net NPA ratio of the bank stood at 0.43 percent in Q4 FY25, as compared to 0.46 percent in Q3 FY25 and 0.33 percent in Q4 FY24.
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The shares of the private lender have rallied over 21 percent in the past six months, and nearly 4 percent in the past one month. The stock has gained over 12 percent in 2025 so far.
HDFC Bank recently sold 13.51 crore shares worth Rs 9,814 crore of its subsidiary HDB Financial which recently made a decent debut on the stock markets. After the stake sale, the private lender now holds 74.19 percent stake in the NBFC.
