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Bonus/Stock Split Alert

View Bonus declared by companies.

COMPANY

Bonus Ratio

                               DATE                                                        

Announcement

Record   

Ex-Bonus

Navoday Ent

1:1 12-10-2022 29-11-2022 29-11-2022

Mah Seamless

1:1 17-10-2022 24-11-2022 23-11-2022

Easy Trip

3:1 10-10-2022 22-11-2022 21-11-2022
Motherson SWI 2:5 30-09-2022 17-11-2022 16-11-2022
Modi's Navnirma 3:1 28-09-2022 15-11-2022 15-11-2022
GPT Infra 1:1 27-09-2022 12-11-2022 11-11-2022
FSN E-Co Nykaa 5:1 03-10-2022 11-11-2022 10-11-2022

Punit Comm

5:1

04-10-2022

09-11-2022

09-11-2022

Atam Valves

1:1

05-09-2022

24-10-2022

21-10-2022

REGENCY FINCORP

1:1

05-09-2020

21-10-2022

21-10-2022

U. H. Zaveri

2:3

03-09-2022

19-10-2022

19-10-2022

Veeram Sec

1:2

10-08-2022

15-10-2022

14-10-2022

Gretex Corporat

8:1

02-09-2022

13-10-2022

13-10-2022

Latteys Industr

3:2

22-08-2022

12-10-2022

12-10-2022

Shivalik Bimeta

1:2

29-08-2022

13-10-2022

12-10-2022

Kaarya Faciliti

1:1

06-09-2022

12-10-2022

12-10-2022

Globe Internati

1:1

23-07-2022

12-10-2022

12-10-2022

SecMark Consult

3:2

23-08-2022

12-10-2022

12-10-2022

Shree Vasu

1:2

29-08-2022

11-10-2022

11-10-2022

SMVD Poly Pack

102:100

22-08-2022

11-10-2022

11-10-2022

Ruchira Papers

1:10

30-08-2022

11-10-2022

10-10-2022

Anshuni Com

4:1

26-08-2022

07-10-2022

07-10-2022

Sigma Solve

3:2

24-08-2022

10-10-2022

07-10-2022

Saianand Comm

1:1

25-08-2022

08-10-2022

07-10-2022

Asian Hotel (E)

1:2

14-11-2019

07-10-2022

06-10-2022

Specular Market

6:1

13-08-2022

05-10-2022

04-10-2022

Jonjua Overseas

4:23

31-08-2022

03-10-2022

03-10-2022

Quadpro ITeS

1:1

27-08-2022

03-10-2022

03-10-2022

Yug Decor

1:2

16-08-2022

03-10-2022

03-10-2022

MOTHERSON

1:2

16-08-2022

05-10-2022

03-10-2022

Insecticides

1:2

20-08-2022

03-10-2022

30-09-2022

 

View Companies Splits.

Company

Old FV

New FV

Split Date

Mefcom Capital 10 2 02-12-2022
Chandra Prabhu 10 2 30-11-2022
Pressure Sentiv 10 1 16-11-2022
Arfin India 10 1 14-11-2022
Steel Str Wheel 5 1 10-11-2022
Confidence Futu 10 5 03-11-2022
Sanmit Infra 10 1 31-10-2022

TD Power System

10

2

31-10-2022

Sanmit Infra

10

1

28-10-2022

Kshitij Polylin

10

2

27-10-2022

Anjani Foods

10

2

21-10-2022

Perfect Pack

10

2

21-10-2022

Axita Cotton

10

1

21-10-2022

Global Educatio

10

5

19-10-2022

TPL Plastech

10

2

19-10-2022

HLE Glascoat

10

2

18-10-2022

Greencrest Fin

10

1

12-10-2022

Nikhil Adhesive

10

1

12-10-2022

Colorchips New

10

2

12-10-2022

Ajooni Biotech

10

2

07-10-2022

There is a high prevalence of bonus issues and stock splits among India, as they are worldwide. The big question is whether these bonus issues and stock splits actually provide shareholders with additional value. Both of these situations result in an increase in the number of shares issued to shareholders and a decrease in the share price. Consequently, in terms of the wealth effect, the effect is insignificant as the increase in number of shares and the fall in price ex-bonus or ex-split tend to compensate one another. In order to understand bonus and split more fully, let us first examine the concept in more detail.

What are bonus shares?

Bonus issue is when the company announces to give additional shares in a certain proportion as a reward to its existing shareholders. Bonus shares are given in addition to the shares already held.

For example, if a company has declared bonus in 2:1, then each shareholder who has one share will get two additional shares.

If someone has a total of 100 shares of a company, then after the bonus issue, he will have a total of 300 shares (100 + 200). Shareholders do not have to pay any amount to get bonus shares.

If a company has issued a bonus issue in 4:1, it means that the shareholder holding one share will get four additional shares. The second figure of the bonus issue ratio shows the number of actual shares.

Why do companies issue bonus shares?

Any company has the right to issue bonus to its shareholders. Companies keep rewarding their shareholders in different ways from time to time.

If the company wants, it can issue bonus by not paying dividend in the form of cash out of its reserves. Whether to give dividend or bonus to the shareholders, it completely depends on the company.

Thus the company can give bonus to its existing shareholders out of its retained earnings or reserves.

The company issuing the bonus also creates a positive image in the market, which is also one of the main reasons for issuing the bonus.

Effect of Bonus Shares on Share Price

As a conscious investor, you should also know the Bonus Share meaning along with how the Bonus issue will affect the share price.

Let's assume XYZ Company issued a bonus issue in 2:1. Mr. Manoj has total 100 shares of this company and the current share price of the company is ₹ 300.

 

No. of Shares

Share Price

Investment Value

Before Bonus

100

₹300

₹30,000

After Bonus

300

₹100 (₹300/3 Shares)

₹30,000

In this way your investment after the bonus will remain the same. But the value of the share will be reduced in proportion to the bonus share. In this example 2 bonus shares are issued instead of one. Therefore, after the bonus, there will be a total of 3 shares, which is divided into the current market price of the share and the new share price is derived.

If a company has issued a bonus issue in 4:1 and the share price is ₹1000 then the value of one share after the bonus issue will be ₹200 (₹1000/5).

Impact of Bonus Issue on Balance Sheet

You can understand the effect on the balance sheet after the release of bonus with the help of this example –

Bonus issue in 2:1

  • Shareholder Equity (Before Bonus)
  • Share Capital – ₹ 10 Crore (Face Value ₹ 10 × 1 Crore Shares)
  • Reserves – ₹ 50 Crore
  • Total Shareholder Equity – ₹ 60 Crore

 

Shareholder Equity (After Bonus)

  • Share Capital – ₹ 30 Crore (Face Value ₹ 10 × 3 Crore Shares)
  • Reserves – ₹ 30 Crore
  • Total Shareholder Equity – ₹ 60 Crore

 

In this example the total number of shares before the bonus was 1 crore. But after issue of bonus shares, the shares become 3 crores. Due to this the share capital will be 30 crores. Out of the additional 20 crore reserve, share capital has been transferred. Thus there will be no impact on the total shareholder equity.

Keep in mind that there is no change in the face value of the company's shares in a bonus issue.

Bonus Share Declaration and Bonus Issue Important Dates

There are some important dates related to the bonus issue that you need to keep in mind.

Bonus Announcement Date – On this day the company announces the bonus to its shareholders.

Record Date – Record date is the date on which the list of eligible shareholders is prepared. Shareholders whose names are in the record list on this day will be entitled to get the bonus.

Ex – Bonus Date – This date is 2 days before the record date. Because there is T+2 settlement in India. If someone has bought shares on X bonus date then he will be entitled to get bonus and whoever has sold shares on this day will not get any bonus.

Bonus Share Credit Date – On this day, bonus shares are credited to the account of the share holder.

Suppose ABC Ltd. has declared a bonus issue on 1st January. Mr. Vijay holds 100 shares of ABC Ltd. The record date for this issue is January 22 and the ex-record date is January 20.

If Vijay holds the shares till January 22, he will be entitled to get the bonus. If Vijay sells these shares to Ajay on 20th January itself then Ajay will get bonus share and not Vijay.

If Vijay had sold his shares to Ajay on January 21, the bonus shares would still be received by Vijay. Because his name will be recorded in the share book on the record date. These shares will be credited in Ajay's demat on T+2 i.e. on 23rd January in his name which will not count for bonus.

 

Bonus Share Eligibility

If a company has announced a bonus and you own the shares of that company, then you will be entitled to get the bonus. Provided you hold those shares till the record date of the bonus.

Bonus shares are credited to the demat account of the investor.

 

Bonus Share Benefits

Benefits to the company from bonus

  • Issuance of bonus lowers the share price thereby increasing the amount of liquidity in the company.
  • If the company issues bonus, then the reputation of the company increases and the confidence of the investors is instilled in the future of the company.
  • If the company has more reserves, the company can transfer the share capital by issuing bonus from the reserve.

Benefits to the investor

  • With the issuance of bonus, the number of shares of the company with the investors increases.
  • With the increase in the number of shares, the investor gets more dividend than before. Because dividend is issued per share.
  • The share price of the company decreases after the bonus shares. With this, such investors who were not able to invest in the company's stock due to the high share price will also have a chance to invest in the shares.
  • If the market sentiment is correct, then after the bonus issue, the share price is expected to increase due to the decrease in the share price.
  • Issuing bonus is considered good for the investors as the company has rewarded the investors by issuing shares. Because the company increases its liability by increasing the outstanding shares.

 

Disadvantages of Bonus Shares

As an investor, there is no special loss from the bonus. This does not change the profit of the company, but the number of outstanding shares increases, which definitely leads to a fall in EPS.

Talking from the point of view of the company, the company does not get any cash from it.

If the company continues to issue bonus shares in the form of dividend regularly, then the cost of its bonus issue increases in the coming years.

 

Guidelines to be followed by the company before issue of Bonus Shares

 The Association's manual must approve the bonus issue before the bonus shares are issued. If the Association's rules are unable to do so, the company will have to pass a special resolution act at its general meeting.

  • In case of a general meeting, the bonus issue should also be approved by the shareholders
  • Guidelines issued by SEBI to be followed
  • The company should ensure that the total share capital as a result of the bonus issue does not exceed the authorized share capital. In case of such a situation, the capital clause in the Memorandum of Association should be amended by increasing the authorized capital
  • If the company has taken the loan, the financial institution(s) involved should be informed first
  • Before bonus issue, a company should inform the Reserve Bank and get its approval
  • Bonus shares to be issued must be fully payable. If the shares are partly paid, it will make the shareholders liable to pay the unpaid amount

 

What is stock split?

As a stock market investor, you need to be aware of some important stock market terms. One important term among them is stock split or share split. Many investors get worried when there is a stock split in any of their invested shares and they do not understand what are stock splits and what are they supposed to do? As recently happened in IRCTC stock split. Many investors get worried when there is a stock split in any of their invested shares and they do not understand what are stock splits and what are they supposed to do? As happened in the recent IRCTC stock split.

  • Stock split, as the name suggests, is the process of splitting the shares of a company. Stock split is a corporate action in which companies divide their stocks in a fixed ratio.
  • In a share split or stock split, the shares of that company are split into pieces and each piece becomes a new share. Due to stock split, the shares of the company increase in the market.
  • Along with this, the share price and face value of the company are reduced in the same proportion in which the stock split takes place.

 

Example – What is a stock split?

With this example you will easily understand Stock Split meaning in Hindi –

Let's assume we have 10 shares of ABC Ltd. whose share price is ₹1,000. While its face value is ₹10. Thus the value of our total investment is ₹10,000 (₹1,000×10).

ABC Ltd. decides to split its shares in 2:1. This means that 1 share of this company will be converted into 2 shares. With this the share price and face value will be halved (being in 2:1 it will be divided by two)

After the stock split, our 10 shares will be converted into 20 shares. Whereas the share price will be ₹1,000 to ₹500. Also the face value will be ₹ 10 to ₹ 5.

2:1

Before Stock Split

After Stock Split

Total Share

10  Shares

20 Shares

Share Price

₹1,000

₹500

Face Value

₹10

₹5

Total Investment Value

₹10,000

₹10,000

There will be no impact on the total investment value due to the stock split.

If ABC Ltd. decides to do a stock split in the ratio of 5:1, it means that 1 share of ABC Ltd will be converted into 5 shares. That is, the shareholder who has one share in him will get 5 shares.

Also the share price and face value will become 1/5. Thus we will have 50 shares of ABC Ltd. The share price will become ₹200 and the face value will be ₹2.

5:1

Before Stock Split

After Stock Split

Total Share

10  Shares

20 Shares

Share Price

₹1,000

₹200

Face Value

₹10

₹2

Total Investment Value

₹10,000

₹10,000

Splitting the stock does not affect the total investment value. Apart from this, the market capitalization of the company is also not affected by the stock split. The capitalization of the company remains the same as it was earlier.

Why does a company do a stock split?

Now you must be thinking that why a company does a stock split? The main reason for doing a stock split is the high share price of a company.

Another reason may be that the share price of the company is very high relative to its peers. As the price of all companies in the auto sector is running between ₹ 300 to ₹ 500, while the value of 1 share of an auto sector company has reached ₹ 2,000.

In such a situation most of the investors would not like to invest in that company. In such a situation, that company can settle its stock price between ₹ 300 to ₹ 500 by bringing Stock Split.

In another reason, the company can also do stock split to increase the amount of liquidity. Due to a stock split, small investors think that the company's stock has become cheaper than before and thus the demand for the shares increases.

Key Takeaways:

  • A stock split increases the total number of outstanding shares of a company.
  • There is no impact on the market cap of the company.
  • The stock price and face value are reduced in proportion to the stock split.

 

Advantages of Stock Split

  • Benefits to investors:

Older investors who already have shares of the company, they have an increase in the number of shares. As the number of shares increases, they get more dividend.

Small investors can also easily buy shares of the company due to the fall in the value of the shares.

  • Company advantage:

Due to a stock split, the share price decreases, this increases the amount of liquidity in the company’s stock.

 

What is Reverse Stock Split?

A reverse stock split is exactly the opposite of a stock split. By doing a reverse stock split, companies reduce their shares in the market, which increases the company's stock price.

When a company feels that its share price has fallen significantly compared to its competitors, they use a reverse stock split to increase the stock price. There is no impact on our investment value even in reverse stock split.

Let us understand Reverse Share Split with the help of an example –

Let's say we have 100 shares of ABC Ltd. The price of one share is ₹10 and the face value is ₹2. Thus our total investment value is ₹1,000.

If ABC Ltd. decides to reverse stock split in 1:5 it means that every 5 shares of ABC Ltd. will get converted into 1 share. Also the share price and face value will become 5 times.

After the reverse stock split, we will have 20 shares (100 shares / 5). The share price will be ₹50 (₹10×5) and the face value will be ₹10 (₹2×5). Whereas the investment value will remain ₹1,000 only.

1:5

Before Stock Split

After Stock Split

Total Share

100  Shares

20 Shares

Share Price

₹10

₹50

Face Value

₹2

₹10

Total Investment Value

₹1,000

₹1,000

 

Stock Split Vs Bonus issue

 

Bonus Issue

Stock Split

Meaning

In bonus issue additional shares are given free of cost to the shareholders.

In a stock split, the shares of the existing shareholders of the company are divided in a fixed proportion.

Example

For a 4:1 bonus issue, shareholders will receive four shares free of charge for each share.

In a stock split of 1:2 ratio, for every 1 share, 2 shares will be awarded.

Face value

 

No change.

Decreases in stock splits.

Purpose

To pay as dividend.

Lower share price, increase liquidity.

 

Throughout this article, you learned what a bonus, a stock split, and a reverse stock split are. Additionally, you learned how stock splits and bonus shares differ.

The market continues to see many companies issue bonus issues from time to time. It is pertinent to note that this does not imply that none of these companies are worth investing in. Investing in a company involves a number of factors, including bonuses.

Although bonuses are generally thought to be suitable for investors, it is not advisable to invest in them solely due to the fact that the company is issuing bonuses. A thorough understanding of how to select a suitable stock is essential for the selection of stock. Stock market investing requires consideration of bonuses. Therefore, it becomes your responsibility to review the bonus history of the company.

 

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