A few companies announced bonus shares for their investors in December 2022. If you are wondering whether the companies in your portfolio have notified bonus shares in 2022, this article is for you.
Companies can issue bonus shares despite having higher liquidity to avoid paying steep dividend distribution tax (DDT) levied when announcing dividends. In another case, companies may issue free bonus shares when they don’t have enough liquidity to pay dividends. In either case, bonus shares increase the supply of the company’s shares in the market, lowering the share price and attracting more new investors.
Issuing bonus shares is also called capitalisation of profit because they are issued from the profit reserve of the company. Companies issue bonus shares based on the shareholder’s existing stake in the business in a fixed ratio. So, if a company announces bonus shares in the ratio of 1:3, it would mean that existing shareholders will receive three bonus shares for one share they hold. As a result, the dividend per share and the share price reduce as the number of available shares increases in the market.
Effects of issuing bonus shares
There are several effects of bonus shares.
- It will increase the number of outstanding shares of the company in the market.
- It will reduce the share price, making it more affordable for more investors.
- Bonus shares help reduce the free reserve of the company.
- The implicit value of the equity share will increase.
- Market liquidity will increase with the availability of more shares.
- Per-share ratios like earnings per share, book value per ratio, price-to-earnings ratio, etc., decrease with bonus shares.
After answering the question: what is bonus share?, let’s look at the companies giving bonus shares in December.
Companies giving bonus shares in December 2022
So far, two companies have announced bonus shares this month. Here is a list of companies giving bonus shares.
|Sl no||Company name||Change in Stock Prices in Past 12 Months||Ex-date|
|December 22, 2022|
|2||BLS International Services||
|December 8, 2022|
The company produces and sells winding wires made of copper. They have fixed December 22, 2022, as the record date for ascertaining the eligibility of shareholders for bonus shares. The bonus shares will be issued at a 1:2 ratio, or shareholders will receive one bonus share for every two shares they own.
Market capitalisation: ₹1,257
P/E Ratio (TTM): 18.49
Industry P/E (TTM): 40.78
BLS International Services
BLS International Services offers tech-enabled visa, consular, and citizen services. The company has fixed December 10, 2022, as the record date for 1:1 bonus shares. Shareholders on the record date will receive one bonus share for each fully-paid share owned by them.
Market capitalisation: ₹ 7,732
P/E Ratio (TTM): 105.11
Industry P/E (TTM): 30.03
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