Listed companies take various actions depending on the requirements or consensus of their shareholders or to achieve some other objectives.
Corporate actions, for example, are initiatives taken up by a corporate entity that brings in a change to its stock.
A few such actions include going for a bonus issue, announcing a stock split, and paying dividends.
Three companies are going to issue bonus shares or go for a stock split soon. A brief about what these corporate actions mean and a look at the companies going for the corporate actions has been mentioned later in the blog.
Here are 3 companies that will issue bonus shares or go for a stock split soon:
- Affle India
Affle India announced a 5 for 1 stock split on August 26 i.e. if you have 10 shares, you will have 50 shares after the stock split.
The record date for the split is October 8 which means investors must have shares of Affle India in their Demat account before this date to avail of the stock split
Check out more about the company here: Affle India
IRCTC announced a stock split of 5 shares into 1.
The record date for the stock split is October 29, which means investors must have shares of IRCTC in their Demat account before this date to avail the stock split.
Check out more about the company here: IRCTC
SRF announced a 4 for 1 bonus issue on August 31, i.e. if you have 1 share, you will get 4 additional shares after the bonus issue.
The record date for bonus issue is October 14 and the ex-bonus date is October 13.
Check out more about the company here: SRF
We hope you found this update insightful.
What is a bonus issue?
Under a bonus issue, a company issues free shares to its shareholders.
For example, if a company decides to go for a 2:1 bonus issue, it will allot 2 additional shares (for free) for every 1 share held by a shareholder.
However, the share price per share is reduced in similar proportions and the total value of investment remains the same.
Think of it this way: You earlier had 1 share at a total value of Rs 60 and now you have 3 shares (in case of a 2:1 issue) each priced at Rs 20, giving a total value of Rs 60.
As you can see from the above example, a company usually issues bonus shares so as to reduce the price of the shares and encourage retail participation.
What is a stock split?
When a company undertakes a stock split, that’s what literally happens!
Your stocks are split!
Suppose you held 1 share of Rs 100 and a company announces a 1:5 stock split, you would now own 5 shares.
But, the value of each share will now be Rs. 20. Hence, the total value remains the same – Rs 100. Like in the case of bonus issues, this move is also taken to encourage retail participation.
The prime difference between a bonus issue and a stock split is that in a bonus issue, the company issues new shares in the market whereas in-stock split, the existing shares are split.
Note: This article is only for educational and informational purposes. Investors are advised to invest in stocks after thorough research and based on their investment goals.