Ashok Leyland, the commercial vehicle giant, crashed by nearly 51% on July 16 as it turned ex-bonus for the 1:1 bonus issue ratio. Wednesday was also fixed as the record date to determine eligible shareholders for bonus payout. This will be Ashok Leyland's first bonus in 14 years. Should investors worry because of the latest price drop?
Ashok Leyland Share Price:
On July 16, Ashok Leyland turned ex-bonus, which means its share price adjusted to the upcoming bonus issue allotment.
On the ex-date, Ashok Leyland opened at Rs 125.40 apiece and touched an intraday high of Rs 125.90 apiece before ending at Rs 124.65 apiece, down by 0.64% on NSE. Notably, Ashok Leyland had also touched an intraday low of Rs 122.70 apiece.
At intraday low, the stock crashed by 51.09% in a single day. Compared to the current closing price, Ashok Leyland is down by 50.3% from its previous day price of Rs 250.85 apiece. The reason is the adjustment to the bonus issue.
That being said, the pre-bonus share price is Rs 250.85 apiece.
During a bonus issue, the face value of a stock remains the same. However, the share capital reserves reduce because new shares are issued.
According to Zerodha FAQS, the average price, or buy average price, of a stock is reduced after the credit of bonus shares to the account because the bonus shares are credited at no cost, and the holding average is calculated using the First In First Out (FIFO) method. As bonus shares are free, their buy price is considered zero.
Ashok Leyland Bonus Issue:
Ashok Leyland has declared a bonus issue of a 1:1 ratio. For this, the company had fixed Wednesday, July 16, 2025, as the record date for determining the eligible shareholders for allotment of bonus shares.
The allotment of bonus shares is expected to be carried out on Thursday, July 17, 2025, and these bonus shares will be made available for trading on the next working day of allotment, i.e., Friday, July 18, 2025.
This will be the first bonus issue by Ashok Leyland in 14 years. The first time Ashok Leyland turned ex-bonus was on August 2, 2011, in the ratio of 1:1.
One of the reasons why listed companies carry bonus issues is to distribute gains of accumulated earnings without paying cash to the shareholders.
Bonus issues are free additional shares given to existing shareholders based on the number of shares owned.
For example, if someone holds 500 shares in Ashok Leyland by the end of the July 16th record date, then they will receive 500 free shares as a bonus (500 x 1/1). This will take their total number of shares to 1,000 shares.
Hence, investors should not worry about the latest decline in Ashok Leyland on the ex-bonus date.
Ashok Leyland Share Price Recommendation:
The consensus recommendation from 37 analysts for Ashok Leyland Ltd. is BUY, as per Trendlyne data. EPS is expected to grow by 5.4% in FY26. The average 1-year target price is set at Rs 267.89 apiece, indicating about 115% potential upside ahead.
Last month, Emkay Global said, "We believe that an improving CV outlook and sustained efforts toward profitable (value-led) volume growth (thereby also strengthening the balance sheet), amid the continued shift toward higher-tonnage vehicles and supported by higher non-vehicle (non-cyclical) revenue, could act as a re-rating catalyst for AL. We maintain BUY with TP of Rs280." This is a pre-bonus target on Ashok Leyland.
About Ashok Leyland:
Ashok Leyland, the flagship of the Hinduja group, is the 2nd largest manufacturer of commercial vehicles in India, the 4th largest manufacturer of buses in the world, and the 19th largest manufacturer of trucks. A US$4.5 billion company that has a 75-year legacy and a footprint that extends across 50 countries, Ashok Leyland is one of the most fully integrated manufacturing companies this side of the globe.
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