Around 7 firms have declared bonus issue of shares in the last couple of weeks. Bonus shares are basically additional shares issued by a company to its pre-existing shareholders. These are fully paid shares and the shareholders do not have to incur any extra costs to get them. The number of bonus shares you receive depends on the number of shares of the firm you already hold.
Mishtann Foods, RO Jewels and HICS Cements are the three stocks that will trade ex-bonus on June 2. India follows a T+2 rolling system, which means the ex-date is 2 days before the record date. If an investor wants to be eligible for the bonus issue must buy shares before the ex-date. Anyone who buys the stock on the ex-date will not be eligible for the bonus issue.
Mishtann Foods and HICS Cements has announced a 1:1 bonus issue. It means for everyone shares a person holds, he/she will get one additional share. Say you hold 20 shares in a firm and it issues a 1:1 bonus share, you will receive 20 extra shares in your Demat account.
Mishtann Foods has given steller returns to its investors in the last one year, rising over 430 percent in this time and around 16 percent in 2022 YTD.
Meanwhile, RO Jewels has announced an 83:32 bonus issue. This implies an investor will get 32 bonus shares for one lot of 83 shares held as of ex-date. The stock has risen over 50 percent in the last 1 year
Further, Nintec Systems and Varun Beverages have declared their ex-date for the bonus issue on June 6. Both these companies have announced a 1:2 bonus issue. An investor will get 1 bonus share for every 2 shares held.
Nintec Systems has advanced 145 percent in the last 1 year while Varun Beverages have added 58 percent in this period.
Lastly, in the month of June, Indian Oil as well as Ratnamani Metals have also announced a 1:2 bonus issue with an ex-date of June 30. Indian oil has only gained 6 percent in the last 1 year whereas the latter is up 33 percent in this time.
This is mostly done to increase the liquidity of the stock. When the price of a share is high, a number of retail investors may find it difficult to buy that share. By issuing bonus shares, the total number of shares of the firm increases, thus reducing its stock price and making it accessible to more investors. With more shares in the market at a low price, the liquidity and investor engagement of the shares improve considerably.
All shareholders who own shares of the firm before the ex-date, which is determined by the firm, are eligible for bonus shares.
The bonus shares are then credited to the shareholders' accounts within fifteen days after a new ISIN (International Securities Identification Number) is assigned to them.