Bonus Shares in December 2022

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.

Precision Wires

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

Conclusion 

Now you have learned bonus shares meaning, explore more such stocks to Invest in the share market. Open a Demat account with a registered online share trading platform like Angel One. You can check out the Angel One blog for updates on the market, companies, and stocks.