5 Stocks That Went Ex-bonus This Week

Five companies that earlier had announced bonus, this week they had fixed their record date for giving bonus. The companies are Captain Pipes, 360 ONE WAM, Jayant Infra, Pulz Electronic and M K Proteins.

Here are the details

Company Name	Bonus Ratio	Ex-Bonus	Last Market Price (Rs/share)	Market capitalisation (Rs in crore)
Captain Pipes	2:1	03-03-2023	24.40	343.71
360 One WAM	1:1	02-03-2023	445.60	15866.58
Jayanta Infra	2:1	01-03-2023	119.05	115.56
Puls Electronic	1:1	01-03-2023	60.25	656.966
MK Proteins	2:1	03-03-2023	730	9,134.052

A bonus share issue refers to getting free shares from the company to existing investors / shareholders. Company freely distributes shares to its current shareholders as fully paid shares to capitalise a part of the company's retained earnings for conversion of its share premium account, or distribution of treasury shares. An issue of bonus shares is referred to as a bonus share issue.

Whenever a company issues bonus shares, the stock price drops to a reasonable range post a bonus issue, which makes it affordable for investors to purchase more shares. At the company level the reserve of the company contracts and the share capital expands post a bonus issue.

The book value of the company remains the same, but due to the increase in the number of outstanding shares, the book value per share falls. Similarly, the earnings per share of the company decreases and in order to maintain the valuation, the stock price is adjusted on a proportionate basis (1:1, 1:2 etc).

Let's say that the stock price of ABC company is trading at Rs 100 per share and the company announces bonus in the ratio of 1:1. Due to bonus shares, the number of outstanding shares goes up. So, if the outstanding shares before the bonus issue were 10 lakh, then after the bonus issue, that number would increase to 20 lakh shares.

Simultaneously, the price of the stock falls to Rs 50. So, if a shareholder was holding 10 shares at Rs 100 before the bonus issue (value Rs 1,000). After the bonus issue, this value will remain Rs 1,000 (20 shares x Rs 50). Therefore, there is no addition to the value of investment due to the issue of bonus shares.

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