Bonus Shares in March 2024

Bonus shares represent a corporate action where companies issue additional shares to their existing shareholders without any extra cost based on the number of shares they already own. This gesture is often perceived as a company’s method to reward its shareholders when it cannot disburse dividends in cash but wants to express its gratitude for their continued support.

In the stock market, the issuance of bonus shares is a common practice, deeply influenced by the regulatory framework established by the Securities and Exchange Board of India (SEBI) and the company’s strategic financial management. Check out the companies offering bonus shares in March 2024 in this article.

List of Bonus Issues in March 2024

About Paisalo Digital Ltd

Paisalo Digital Ltd. is a Non-Banking Financial Company (NBFC) in India, focused on providing inclusive finance solutions to the underserved and unbanked segments of the Indian population. The company operates in the microfinance sector, offering various financial products and services designed to meet the needs of individuals and small businesses that traditionally lack access to banking and financial services.

Paisalo Digital Ltd leverages technology to reach its target market, offering digital and scalable solutions that help streamline the process of lending and borrowing. Its business model typically revolves around small-ticket personal loans, business loans, and other financial services tailored to the rural and semi-urban segments of the country.

Details of the Bonus Issue

Bonus Ratio: The bonus ratio of 1:1 is particularly generous, effectively doubling the number of shares held by each shareholder without any additional cost to them. 

Record Date and Ex Date: The record date and the ex-date being the same, March 20, 2024, is crucial for investors. The record date is the cut-off date established by the company to determine which shareholders are eligible to receive the bonus shares. The ex-date is typically one business day before the record date. 

Note: The data is as of February 20, 2023. 

Benefits of Bonus Shares

Bonus shares offer a range of benefits to both the issuing companies and the shareholders. Here’s an outline of the key advantages:

For Shareholders

• Increased Ownership Without Additional Cost: Shareholders receive additional shares without investing more money, effectively increasing their stake in the company at no extra cost.
• Perception of Value: The issuance of bonus shares is often perceived as a positive signal by the market, indicating that the company is confident about its future prospects. This can enhance the perceived value of the company among investors.
• Improved Liquidity: Bonus shares increase the number of shares available for trading, enhancing the stock’s liquidity. Higher liquidity makes it easier for shareholders to buy or sell shares without affecting the price too much.
• Tax Efficiency: In many jurisdictions, receiving bonus shares is not taxable at the time of issuance. The tax implications are usually deferred until the sale of the shares, providing a tax-efficient way to increase one’s investment in a company.
• Dividend Benefits: Although the dividend per share may decrease initially after the issuance of bonus shares due to the increased number of shares, shareholders who hold more shares could eventually benefit from higher total dividend payments if the company continues to grow and distribute dividends.

For Companies

• Positive Market Signal: Issuing bonus shares can be a strategy to signal confidence in the company’s future prospects to the market. It shows that the company has enough retained earnings to redistribute to its shareholders, which can be interpreted as a sign of financial health and optimism.
• Capital Structure Optimisation: By converting retained earnings into share capital, companies can optimise their capital structure. This action reduces the company’s reserves and increases its share capital without changing the equity base, making its financial structure more appealing to investors.
• Enhanced Liquidity and Marketability: With more shares in circulation, the stock’s liquidity improves, making it more attractive to investors. This can lead to a broader shareholder base and potentially more stable share prices due to increased trading volume.
• Shareholder Satisfaction and Loyalty: Bonus issues can be used as a tool to reward and retain shareholders. By providing additional shares to existing shareholders, companies can foster a sense of loyalty and satisfaction, which is crucial for maintaining a stable investor base.
• No Cash Outflow: Unlike dividends that result in cash outflow, issuing bonus shares allows companies to reward shareholders without affecting their cash reserves. This particularly benefits companies that want to retain cash for future investments or operations.

Conclusion

Investors should meticulously assess the impact of bonus shares on their portfolios and align such evaluations with their investment objectives and preferences. Initiate your journey in the stock market by opening a free Demat account with Angel One, and seize the opportunity to invest in the bonus shares that align with your financial strategy today!

Disclaimer: This article is written for educational purposes only. The securities mentioned are only examples and not recommendations.