Bonus share are lucrative for existing shareholders as their count of the share increases in their portfolio at no addiitonal costs, though the value of their holding in the stock remains the same, post the bonus issue. This is because on the ex-bonus date, the stock price of the scrip announcing the bonus share issuance gets adjusted for the bonus share announced.
So, here are the 2 companies from the auto and packaging space to consider bonus share issuance:
The mid-cap auto ancillaries company will consider the following as intimated in a filing on May 17, 2022
Audited Standalone and Consolidated Financial Results of the Company for the Quarter and Year ended on March 31, 2022.
Audited Standalone and Consolidated Financial Statements of the Company for the Year ended on March 31, 2022.
To consider and recommend final dividend on equity and preference shares, if any, for the Financial Year 2021-22.
To consider and recommend issue of Bonus Shares, subject to shareholders and other requisite approvals.
Raising of funds through issue of debt securities upto Rs. 1000 Crores in one or more tranches, subject to shareholders and other requisite approvals.
The stock's price last at around 11:59 am traded with a cut of 0.62% at Rs. 870 per share on the NSE.
This is a small cap company into the packaging space. The company's shares as of writing this report are locked in 5% upper circuit. The company manufactures semi-finished plastic products, such as thermoplastic films/sheets/liners.
In a filing on May 9, 2022, the company informed of the board meet for the following purposes:
consider and approve Audited Standalone and Consolidated Financial Results of the Company for the quarter and year ended March 31, 2022;
consider and recommend Dividend, if any, on equity shares for the financial year ended March 31, 2022, and
consider issuance of Bonus Shares subject to requisite approvals.
Should you be buying these shares to announce bonus shares?
Technically the stock of Minda is seen to deliver double digital returns in the short term. Also, after the sharp correction, there is seen bullish reversal. Rs 940 is an immediate resistance; above this, we can expect a rally towards 100-DMA of Rs 1,020. Momentum indicator RSI (relative strength index) witnessed a positive crossover from oversold territory.
Also, when considering the sector PE, the stock's trailing PE is 70.75. Also, Emkay Global has recently given a target price of Rs. 1135 for the stock.
Xpro India on the other hand looks expensively value, nevertheless its financials have seen a good gain from net income of Rs. 0.4 crore in Fy 20 to Rs. 8.33 crore. So, because of over-valuations, this stock can be given a miss, despite the bonus share consideration.