HDFC Bank bonus shares: Stock rises ahead of ex-date; key details

HDFC Bank, India’s second most valuable company, will turn ex-bonus on Tuesday. At 10 am, the stock was up 0.39 per cent at Rs 1,972.50 ahead of the corporate action. The lender had announced a 1:1 bonus issue. Karur Vysya Bank will also turn ex-bonus the same day, in the ratio of 1:5.

A total of 36.01 lakh small investors (holding shares worth up to Rs 2 lakh as of June 30) stand to benefit from the bonus issue, along with 698 mutual fund schemes, insurance firms led by LIC, and FPIs such as Vanguard and the Government of Singapore. About 32,436 NRIs will also gain from the corporate action. The record date for the bonus issue is set at August 27, Wednesday. Stock investors holding HDFC Bank shares on this day will be eligible for bonus shares.

In a bonus issue, shareholders receive additional free shares in proportion to their existing holdings. In contrast, a stock split divides already held shares into smaller denominations without issuing new shares.

For HDFC Bank, the bonus issue would increase the number of outstanding equity shares while reducing its free reserves and surplus. Consequently, the earnings per share (EPS) and share ratio will come down, leading to an adjustment in the stock price.

JM Financial is positive on HDFC Bank. It noted that HDFC Bank has guided for healthy loan momentum across segments in the upcoming festival season, with deposit growth expected to improve CD ratio towards 87–90 per cent. The HDFC Bank management expects 22 basis points of the 50-basis point June rate cut still to reflect in margins and the credit costs to revert to mean over time, it noted. The brokerage suggested 'Buy' on the stock on Monday. Kotak has 'Add' rating on the stock. MOFSL retained its 'Buy' on the stock saying loan growth is expected to align with system growth in FY26 and outpace it in FY27, supported by strong demand in the MSME and rural segments.

Bonus issues in 2025 so far

So far in 2025, at least 70 stocks have turned ex-bonus. In August, companies including Nestle India, VRL Logistics, Kretto Syscon, Bemco Hydraulics, Algoquant Fintech and Murae Organisor went ex-bonus. July saw 18 ex-bonus cases, featuring names like Samvardhana Motherson International, Motherson Sumi Wiring, Ashok Leyland, Container Corporation of India and Sharda Motor Industries.

Notable cases earlier this year included Bajaj Finance (4:1) and V-Mart Retail (3:1) in June; BSE (2:1) in May; Navkar Urbanstructure (3:2) in April; and Anand Rathi Wealth and Greenlam Industries in March. Others such as Indraprastha Gas, KPI Green Energy, Orient Cables (India) and Surya Roshni have also declared bonus shares in 2025.

Banks & bonus shares

In the banking space, there have been 13 prior instances (excluding the latest two) of lenders issuing bonus shares. These include Karnataka Bank (2020), Karur Vysya Bank (2018), City Union Bank (2018), ICICI Bank (2017), Tamilnad Mercantile Bank (2016), Federal Bank (2015), Kotak Mahindra Bank (2015), Capital SFB (2014), South Indian Bank (2008), IDBI Bank (2001) and Punjab National Bank (1983).

Among small finance banks, AU SFB (2022), Jana SFB (2017) and Capital SFB (2014) have also rewarded shareholders with bonus issues.