Introduction:
October 2023 is poised to excite Indian investors, with several stocks and indices trading at crucial levels. A few companies have also announced bonus shares for this month. Investing in bonus shares is an enticing proposition for investors as they can enhance their portfolio holdings' value without requiring additional capital investment.
In this article, you will learn about the concept of bonus shares, understand why companies issue them and explore the upcoming bonus shares in October 2023.
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Understanding bonus shares
Bonus shares, or scrip dividends or capitalisation issues, refer to the additional shares a company distributes to its existing shareholders. These shares are given to the shareholders free of cost in proportion to their existing holdings.
For example, if a company announces a 1:1 bonus share, its shareholders will receive one bonus share for every share they are currently holding.
Companies issue bonus shares for various reasons, including:
Capitalizing on reserves
One of the reasons why companies issue bonus shares is to capitalise on their accumulated reserves and surplus. They convert these reserves into shares to strengthen their equity base without diluting the stakes.
Attracting new investors
Bonus share issues can make a company’s stock more attractive, allowing them to strengthen their holdings without additional capital investment. The announcement of bonus shares also increases the liquidity in a company’s stock.
Enhance market reputation
Many companies announce bonus share issues to enhance their market reputation. It sends a positive signal about the company’s financial health and growth prospects in the market. This often leads to an increase in investor’s confidence.
Rewarding stakeholders
Companies announce bonus shares to reward their loyal shareholders. It helps acknowledge their faith in the company’s growth and ensures they benefit from it.
Upcoming Bonus Shares in October 2023
Below is the list of the companies that have announced bonus shares for October 2023:
1. Yug Décor Limited
Yug Décor Limited is involved in the manufacturing of wood glues, binders, and rubber adhesives. A strong group of promoters and team management backs the company. It has declared a bonus share of 15:100 on 26 September 2023. The record date for the issue of bonus shares is 5 October 2023.
As of 30 September 2023, the shares of Yug Décor were trading for Rs. 89.80 apiece at the Bombay Stock Exchange (BSE). The company’s market capitalisation stood at Rs. 56 crores. The P/B ratio and the Return on Equity (ROE) stood at 8.92% and 15.34% respectively.
2. Jonuja Overseas Limited
Jonuja Overseas Limited is involved in service exports, corporate consultancy, organic manure production, agriculture, and the sale of printed materials. On 22 September 2023, the company announced bonus shares at a fixed ratio of 9:50. The record date was 10 October 2023.
As of 30 September 2023, the shares of Jonuja Overseas Limited were trading for Rs. 15.59 per share at the BSE. The company’s market capitalisation stood at Rs. 10 crores. The book value of the shares is Rs. 14.06 per share, while the face value is Rs. 10 per share. The P/E ratio stood at 7.37.
3. Shri Venkatesh Refineries Limited
Incorporated in 2003, Shri Venkatesh Refineries Ltd. is engaged in the conservation of refining and edible oils. It is one of India's leading manufacturers and suppliers of refined oil, raw oil, and allied products.
On 7 September 2023, the company joined the bonus shares bandwagon with a 1:1 issue. The record date for the issue of shares has been set as 29 October 2023. As of 30 September 2023, Shri Venkatesh Refineries’ shares were trading for Rs. 198.05 per share at the BSE. The company’s market capitalisation stood at Rs. 219 crores.
To conclude
Bonus shares are valuable propositions for investors. Upcoming bonus shares in India in October 2023 include Yug Décor, Jonuja Overseas, and Shri Venkatesh Refineries. These companies not only possess high growth potential but also boast strong financials. However, you must research well and consider your investment goals before making investment decisions.
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