Karur Vysya Bank shares adjusted higher on Tuesday as the stock turned ex-date for its 1:5 bonus issue. The stock opened at Rs 228.95 on the BSE, adjusted for the bonus, and quickly touched Rs 229, marking a gain of 4.25 per cent.
However, against Monday’s unadjusted closing of Rs 263.95, the stock still looked lower by 13.24 per cent. Market participants pointed out that some trading apps may continue to reflect unadjusted prices, creating an impression of a sharper fall than the adjustment warrants.
With August 27 set as the record date – markets will remain closed on Ganesh Chaturthi – Karur Vysya Bank will finalise the list of eligible shareholders tomorrow. Bonus shares are expected to be credited soon after.
The private lender now joins peers in the BSE500 such as Nestle India, Bajaj Finance, Ashok Leyland, Samvardhana Motherson International, Container Corporation of India, Motherson Sumi Wiring, Anand Rathi Wealth, Indraprastha Gas, and Garware Technical Fibres, all of which have announced bonus issues this year. Bonus shares are typically viewed as investor-friendly since they come free of cost, carry the same face value as existing stock, and are funded from free reserves.
By nature, a bonus issue expands the share count, reduces free reserves, and lowers earnings per share (EPS), prompting an automatic adjustment in share price. While often compared with stock splits, the two differ: a bonus rewards shareholders with free shares without altering face value, while a stock split divides shares into smaller units, reducing face value to improve liquidity.
On fundamentals, analysts remain constructive on Karur Vysya Bank. The lender reported strong loan growth of 6 per cent QoQ in Q1FY26, among the highest in the sector, alongside steady return on assets. ICICI Securities, which has a ‘Buy’ rating, highlighted that while net interest margin (NIM) contracted 19 bps QoQ to 3.86 per cent, this reflected superior deposit and loan growth, low savings rates, and minimal bulk deposits. It expects a further ~10 bps compression in Q2FY26 before stabilisation. Importantly, net NPAs remain among the lowest in the industry at 19 bps.