By ARYEMAN RAJ
HDFC Bank has announced a 1:1 bonus share issue for the first time in its history. This means that for every share you currently hold, you will receive one additional share free of cost. The record date for identifying eligible shareholders is August 27, 2025, and the bonus shares are expected to be credited by mid-September. Alongside the bonus, the bank has also declared a special interim dividend of ₹5 per share.
Will the Share Price Drop When
Bonus Shares Are Issued?
Yes, the share price will be adjusted downward when the bonus
shares are issued. Since it’s a 1:1 bonus, the number of shares in circulation
will double. So if the share price was ₹2,000 before the bonus, it will drop to
around ₹1,000 after the bonus is issued. This adjustment is purely mathematical
and does not affect the overall value of your investment. If you owned 50
shares worth ₹2,000 each (₹100,000 total), you will now own 100 shares worth
₹1,000 each—still ₹100,000 in total.
Some people worry that a reduced dividend may hurt investors, but
that’s not the case here. The bank has declared a ₹5 cash dividend along with
the bonus shares. While it’s not a huge payout, it's a real cash benefit. Also,
the value from the bonus shares could grow over time if the bank continues to
perform well. It’s important to understand that a bonus issue doesn’t give you
free money instantly—it increases your number of shares while lowering the
price per share. Your total investment remains the same initially but could
grow over time.
What This Means for You
If you’re a long-term investor, this move is likely positive. You
receive more shares without paying extra and get a ₹5 dividend per share as a
bonus. Though the share price will fall after the bonus issue, your overall
holdings retain the same value. If HDFC Bank continues to grow, your increased
shareholding could translate into higher returns in the future.
In simple terms, the bank is sharing its profits with shareholders
by giving more shares and some cash. There is no immediate gain or loss, but if
the company performs well, you stand to benefit in the long run.