7 Stocks Available On A Bonus Basis, Should You Buy These Stocks?

We have listed a set of stocks, where there is bonus that is available currently on the stocks, should you buy the same now. Most of these bonus shares are for the month of September 2021.

List of companies whose stocks are available on cum bonus basis

Name of Company	Ex-Bonus Date	Record Date
Sportking India	Sept 23	Sept 24
GEE Ltd	Sept 21	Sept 22
TPL Plastech	Sept 16	Sept 18
APL Apollo	Sept 16	Sept 18
Kanpur Plast	Sept 15	Sept 16
Apollo Tricoat	Sept 16	Sept 18
ACE Integrated	Oct 7	Oct 8

Bonus shares does not mean you should buy the stocks

Bonus shares does not make the stock an automatic buy. The stock is likely to fall proportionately once the stock goes ex-bonus. For example, if company A has declared a bonus of 1:1 and the stock is quoting at Rs 100, the stock is likely to fall to Rs 50 once it goes ex-bonus. Having said that it may not fall by the exact amount, but, more or less it does.

Also, it is extremely important to remember that you need to analyze the fundamentals of a company before you invest. For example, do not invest purely on the basis of bonus issue. In the above, what we are highlighting is the fact that the above companies are purely available on a bonus basis and we are not in any way recommending these stocks.

Markets look expensive

Irrespective of the bonus shares, we are telling investors to book profits and not to buy shares, including any of the above, purely because the markets are over valued. The Nifty and the Sensex have just zoomed in the last 2-months powered by massive liquidity flowing into domestic institutions, particularly mutual funds. Fundamentally things look expensive at the moment. According to a recent report by broking firm Motilal Oswal, the Sensex is looking expensive compared to long term averages. The Nifty moved from 16,000 points to 17,000 points within 19 trading days, one of the fastest 1000 point milestone in its journey. HDFC Bank, RIL, and TCS contributed 50% of the 1000 points move from 16,000 to 17,000 points.

Market cap to GDP ratio at highest since 2007

According to India Strategy Report by Motilal Oswal Financial Services the Mcap-to-GDP ratio at 111%, is the highest since 2007. Nifty is currently trading at premium to LPA on P/E and P/B basis. IT and Consumer valuations are at 15-year highs.

According to the India Strategy Report report, the Nifty 12-month forward P/E of 21.8 times is at a premium of 21% v/s its long term average, of 18.0 times. At 3.3 times, 12-month forward P/B for the Nifty is at a 15% premium to its historical average of 2.6 times. We are advising investors to be careful and not jump onto the bandwagon.

Disclaimer

Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage houses are not liable for any losses caused as a result of decisions based on the article. We suggest that you consult a professional advisor. The article merely lists out companies that are offering bonus shares and should not be construed as a buy.