5 Stocks to Watch Out for Bonus Shares and Stock Splits in May 2024

The Q4 earnings season is in full swing, with companies unveiling their financial results. But this year, there's more to the story than just the bottom line.

With geopolitical tensions and a volatile market creating uncertainty, investors are hungry for ways to boost their returns.

That's where corporate actions, like bonus shares and stock splits, come into play.

Bonus shares and stock splits are exciting events for investors because they have a material impact on the company's stock price.

Both mechanisms serve as potent tools to bolster shareholder confidence, stimulate trading activity, and maintain an equitable distribution of wealth.

In today's article, we'll look at five companies to watch out for in May 2024.

#1 Bhagiradha Chemicals

First on the list is Bhagiradha Chemicals.

Bhagiradha Chemicals and Industries came into existence in 1993.

The company is engaged in the business of manufacturing high-quality pesticides.

Over the years, the company has sold its products to over a dozen nations, including the United States of America, Brazil, the United Kingdom, and more.

According to recent regulatory filings with the stock exchanges, the board approved the proposal for the split of equity shares of Bhagiradha Chemicals & Industries at a 1:10 ratio.

This means that one equity share with a face value of Rs 10 each of the company would be subdivided into ten equity shares having a face value of Re 1 each.

The record date for the same is 2 May 2024.

The reason behind the split is to increase the liquidity of the company's equity shares in the stock market and to make it more affordable to small retail investors.

The company reported a consolidated net income of Rs 751.3 million (m) in the December 2023 quarter, down 40.6% from Rs 1265 m in the December 2022 quarter.

Its net profit too, declined 71.8% to Rs 33.2 m.

Moving ahead, the company sets forth an ambitious roadmap aimed at tripling its revenue within the next five years to reach Rs 15 billion (bn).

For more details, see the Bhagiradha Chemicals company fact sheet and quarterly results.

#2 Canara Bank

Second on the list is Canara Bank.

Canara Bank is one of the largest Indian government-owned banks. It's under the ownership of the Ministry of Finance, government of India.

The bank operates in four segments, namely treasury, operations, retail banking operations, wholesale banking operations, and other banking operations. It provides a range of products and services to customers.

Canara Bank in February announced split of the equity shares of the state-owned bank to boost the stock's liquidity.

The bank's board had approved splitting existing shares at a 1:5 ratio.

This means one equity share, with a face value of Rs 10, will be divided into five equity shares, each with a face value of Rs 2.

This is Canara Bank's first-ever stock split. The lender has not issued a bonus share either in its history. The last major corporate action it carried out was a rights issue in February 2017.

The bank posted a nearly 27% YoY rise in its standalone net profit to Rs 36.6 bn in the December 2023 quarter, helped by a 9.5% YoY growth in its network interest income (NII).

Canara Bank reported net interest margins (NIMs) of 3.03% in the third quarter of FY24, broadly flat over last year.

In a big development, Canara Bank recently expressed its intention to list its mutual fund subsidiary.

Once listed, this will mark the fifth mutual fund company to go public in India, following the footsteps of HDFC AMC, Nippon Life India AMC, UTI Asset Management Company, and Aditya Birla Sun Life AMC.

This move is expected to boost Canara Bank's profitability.

For more details, see the Canara Bank company fact sheet and quarterly results.

#3 Nidhi Granites

Third on the list is Nidhi Granites.

Nidhi Granites was established in 1981, it is engaged in dealing or trading in shares securities, and other investments in India. Initially, the company was engaged in the granite blocks and tiles business.

Making waves in the market, this multibagger enterprise has recently made history by announcing its inaugural bonus issue.

The board of directors in their meeting held on 15 March, announced bonus shares in the ratio of 1:1.

This means one new bonus equity share of Rs 10 each for every existing equity share of Rs 10 each held by the shareholders.

The company has set 2 May as the record date for the same.

Nidhi Granites showcased impressive performance for the December 2023 quarter, with sales soaring to Rs 106.6 m, reflecting a substantial 55.6% surge.

The company's net profit also witnessed a remarkable upswing, climbing to Rs 4.5 m, marking a staggering 275% increase from the previous year's Rs 1.2 m.

Moving forward, the company aims to enhance its profitability.

For more details, see the Nidhi Granites company fact sheet and quarterly results.

#4 Arham Technologies

Fourth on the list is Arham Technologies.

Arham Technologies Limited is engaged in the business of manufacturing LED Smart Televisions with different screen sizes under the brand Starshine.

The company also manufactures fans, air coolers, and mixer grinders through third-party manufacturers.

The board considered and approved the recommendation of issuance of fully paid-up Bonus shares in the ratio 1:1, i.e., one equity share for every one fully paid-up equity share of Rs 10 each.

The record date from the same is 3 May 2024.

Moreover, the company's board also approved the raising of funds by way of Issuance of equity shares through a follow on public offer (FPO) up to Rs 600 m.

As per the recent half-yearly data, the company's basic business parameters, viz, its operating revenues as well as after-tax profits, showed some flat movements in opposing directions.

Arham Technologies revenue in the September 2023 quarter witnessed a modest increase, reaching Rs 27.1 m. However, on the profitability front, its net profit dipped to Rs 1.7 m compared to Rs 2.3 m in the previous quarter.

Furthermore, the company recently taped into the EV market. Going forward, the company plans to increase its share in the EV market through its subsidiary.

In the past year, the company's stock delivered multibagger returns of approximately 240% to its stakeholders, i.e., if someone had invested Rs 100,000 into the company's stock a year ago, it would have become Rs 340,000.

For more details, see the Arham Technologies company fact sheet and quarterly results.

#5 Inox Wind

Last on the list is Inox Wind.

Inox Wind is India's leading wind energy solutions provider servicing IPPs, Utilities, PSUs & corporate investors.

The company is engaged in the business of manufacturing and selling wind turbine generators.

It offers erection, procurement, commissioning, operations, and maintenance services.

As per the regulatory filing of Inox Wind dated 22 April 2024, the board of the company approved a 3:1 bonus issue.

This issuance will grant three bonus equity shares for every one existing equity.

The record date is yet to be announced.

The firm also approved an adjustment in the share swap ratio by the board of directors of Inox Wind Energy Limited. The firm also called an extraordinary meeting to approve these two decisions.

Further, the company recently bagged an order to supply 210 MW of Wind Turbine Generators (WTGs) from Hero Future Energies.

Additionally, Inox Wind will provide post-commissioning multi-year operations & maintenance (O&M) services.

Further, the company has planned to expand operations and is in the process of setting up an integrated wind turbine manufacturing facility in Madhya Pradesh at an investment of about Rs 2.5 bn.

Inox Wind share offered stunning returns of 495% in the last one year.

For more details, see the Inox Wind company fact sheet and quarterly results.

Should You Invest in Stocks Declaring Bonus Shares and Stock Splits?

Investing in stocks that announce bonus shares and stock splits can be an appealing option for some investors.

These actions can increase liquidity, generate positive market sentiment, and potentially make the stock more affordable for a wider range of investors.

However, it does not guarantee profitability. One drawback to consider is the potential dilution of earnings per share if the company's profits do not increase proportionally.

Therefore, it's important to consider the company's fundamentals, such as financial performance and growth prospects, before making investment decisions solely based on bonus shares and stock splits.

Dilution concerns and individual circumstances should also be considered.

For the companies with long history of issuing bonus shares, check out 5 Indian companies which have consistently declared bonus shares.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...