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Upcoming Bonus Shares in December 2024

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Published Date: 26 Nov 2024Updated Date: 30 Dec 20246 mins readBy MOFSL

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Introduction

Bonus shares are a way companies reward their shareholders by offering additional shares without an extra cost. This is directly proportional to their existing holdings. When companies distribute bonus shares, it signals strong corporate performance and high liquidity. However, it also means diluting ownership, which can impact earnings per share. It is critical to consider this while investing in these shares. As December 2024 approaches, many companies are gearing up to issue their bonus shares.

2 Upcoming bonus shares to look out for

Here are some of the upcoming bonus shares you can invest in as December 2024 approaches:

1. Shakti Pumps (India) Ltd

Shakti Pumps (India) Ltd is a prominent name in the solar and water pump manufacturing space. The company has built a solid reputation for its energy-efficient and sustainable variants of products. It caters to both domestic and global markets. With increasing demand for renewable energy, Shakti Pumps has shown steady financial growth as it meets the national and international quality standards. It declared a 5:1 bonus share ratio on 4th November, which you can leverage by the record date: 25th November 2024.

2. Raghav Productivity Enhances Ltd

Headquartered in Jaipur, Rajasthan, Raghav Productivity Enhancers Ltd, specialises in producing high-grade ramming mass used in steel manufacturing. With a growing experience of 60 years in the different verticals of mass ramming business, the company is recognised for its focus on manufacturing value-added products with R&D. Its consistent financial performance and global market penetration have made it an attractive investment option. It announced a 1:1 bonus ratio on 12th November 2024. You can get it just as December approaches, on 29th November 2024.

How do bonus shares impact share prices and investment value?

When companies issue bonus shares, the total number of outstanding shares increases. This leads to an adjustment in the stock price. Let's assume a company issues bonus shares in the ratio 2:1, each shareholder will receive two additional shares for every one share held. As a result, their holding is tripled. However, the stock price typically drops proportionally, so the total investment value remains the same.

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Such adjustment improves liquidity and reflects investor confidence in the company. When you consider bonus shares, it is essential to understand that one thing. While bonus shares don't directly increase portfolio value, they do provide opportunities for long-term growth. They amplify your shareholding in a promising company.

Key dates to understand in bonus shares

Here are some critical dates you should monitor when looking to invest in bonus shares:

· Announcement date

When the company publicly announces its decision to issue bonus shares.

· Record date

The date on which you must own shares to qualify for the bonus shares. Missing this date makes you ineligible for the bonus issuance.

· Ex-bonus date

The date of the trading day when the share price adjusts to reflect the bonus issue. Shares purchased on or after this date do not qualify for the bonus. Sometimes, the record date and the ex-bonus date can fall on the same day.

Understanding these dates helps you to not miss out on potential benefits while strategizing for the stock's post-bonus price movements.

Factors to consider before investing in bonus shares

Bonus shares present an excellent financial opportunity. You can benefit from them when you look into the following factors before investing:

· Company's growth potential

Assess the company's financial health, its growth trajectory, and market position. Bonus shares from a steadily growing company are more likely to yield long-term benefits.

· Bonus ratio

The bonus ratio is an important aspect of determining the proportion of additional shares you'll receive and how it aligns with your investment goals.

· Impact on EPS

Bonus issuance dilutes Earnings Per Share (EPS), as the earnings spread across a larger pool of shares. Lower EPS may impact the stock's valuation and vice versa.

· Liquidity and trading volume

Bonus shares often increase liquidity. This makes it easier to buy or sell shares post-issuance. You can evaluate this factor to make an informed decision.

· Sector trends

Evaluate the industry in which the company operates. If the sector is experiencing growth, bonus shares may prove more profitable.

Conclusion

These upcoming shares towards the end of November, will set your path to making the most of bonus shares in December 2024. They provide a unique opportunity to diversify your portfolio and benefit from the increased liquidity. While bonus shares reflect a company's financial strength, it helps to analyze the potential dilution before making decisions. Companies like Shakti Pumps (India) Ltd and Raghav Productivity Enhancers Ltd are paving the way for shareholder rewards. They reinforce the trust in your long-term vision. It is best to evaluate each of these stocks's growth potential and consult with a financial advisor to align these investments with your financial goals.