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Boost Your Portfolio: Watch Out for Bonus Shares in August 2024

equity market

Published Date: 02 Aug 2024Updated Date: 30 Dec 20246 mins readBy MOFSL

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Introduction

Apart from paying dividends, companies also reward their shareholders by issuing bonus shares in proportion to their current shareholding. These are additional shares issued by a company to its existing shareholders without any extra charge or cost, unlike dividends, which are cash rewards. For instance, when a company announces a bonus issue in a 1:2 ratio, a current shareholder holding 100 shares is eligible to receive 50 as a bonus.

The primary aim of issuing bonus shares is capitalising the company’s profit or reserves. Instead of distributing the accumulated reserves or retained earnings, the company converts them into additional shares. The company’s share capital automatically increases by issuing bonus shares without reducing its cash reserves or financial well-being. So, instead of receiving a cash dividend, the shareholders will receive additional shares.

Being aware of the upcoming bonus shares is crucial to investors because their investment strategies can be formulated accordingly. In this article, you will be introduced to some exciting news about upcoming bonus shares in August 2024 in India.

VST Industries Ltd

VST Industries, formerly Vazir Sultan Tobacco Company, is a leading Indian manufacturer of tobacco products and the second-largest cigarette manufacturer operating under brand names like Editions, Moments, Special, Charms, and so on. On July 25, 2024, the company announced a bonus issue in the ratio of 10:1 for the first time. This means that any investor currently holding one fully paid-up equity share in the company worth ₹10 will be allocated ten new bonus shares worth ₹10 each. The record date for the issue is fixed for August 30, 2024. The company will be utilising its free reserves, which are ₹154.41 Cr to cover the bonus issue. However, the company reported a 3.5% dip in their revenue for the quarter ending in June 2024 at ₹3.2 Bn. As of July 31, 2024, the shares of VST Industries Ltd. were trading for ₹4,378.45 at the National Stock Exchange (NSE) and ₹4,379.20 at the Bombay Stock Exchange (BSE).

GRP Ltd

Founded in 1974, GRP Ltd is a prominent manufacturer of reinforced polyamide by repurposing nylon waste and reclaimed rubber. Its core business verticals are spread across seven manufacturing facilities in India: engineering plastics, polymer composite, reclaimed rubber, repurposed polyzolefins, and custom die forms. GRP Ltd announced a bonus issue, which was earlier declared as July 27, 2024, but was later extended to August 12, 2024. The issue of bonus shares in the ratio of 3:1 will mean every shareholder will be eligible to receive three fully paid-up equity shares per share they currently own. As of July 31, 2024, the shares of GRP Ltd. were trading for ₹15,769.55 at the NSE and ₹15,799 at the BSE.

Goel Food Products Ltd

Goel Food Products Ltd, established in 1996, is a leading chain of banquet spaces in West Bengal, hosting over 1000 weddings and social events per annum. This company’s penny stock, with a market cap of ₹64.64 Cr announced a bonus issue of 4:1 with a record date of July 31, 2024. This stock’s 52-week market high was ₹44.69 per share, whereas the market low was ₹25.10 per share. The announcement of this bonus issue means four bonus shares will be distributed per fully paid-up equity share with a face value of ₹10 per share. As of July 31, 2024, the shares of Goel Food Products Ltd were trading for ₹41.10 at the BSE.

Maruti Infrastructure Ltd

Maruti Infrastructure Ltd is a prominent small-cap company in the civil construction sector. The company announced a bonus issue in the ratio of 1:2 with a record date of August 2, 2024. In the past year, the price of this company’s shares increased by 84% and a collective of 291% in the last two years. With a market cap of ₹268.81 Cr, Maruti Infrastructure Ltd offered its shareholders a maximum return of around 891% in the past five years. The announcement of bonus shares in 2:1 means every shareholder will be eligible to receive one bonus share for every two fully paid-up equity shares they hold. The 52-week high and low price of this company’s share on the BSE are ₹254.70 and ₹100.05 per share respectively. As of July 31, 2024, the shares of Maruti Infrastructure Ltd were trading for ₹238 at the BSE.

Conclusion

If investors decide to invest in any of the above-mentioned upcoming bonus shares in August 2024 before the record date, they can receive additional shares without any added costs. However, investors must consider their investment objectives and risk tolerance before making any investment decisions.