5 Stocks Declaring Bonus Shares in December 2022

In 2022, many Indian companies announced bonus shares despite challenging market conditions, rising inflation, and geopolitical concerns that affected their earnings.

So far in 2022, more than 140 companies have declared bonus shares. This is the most since 2006.

Bonus shares are free shares that shareholders receive against shares they currently hold.

Following this pace of bonus issues, some companies have chosen December 2022 as their record date. Here are 5 stocks that will trade ex-bonus shortly this month.

#1 Akme Star

First on the list is finance company Akme Star.

It's a non-deposit-taking housing finance company (HFC). The company provides loans to individuals, corporates and developers for the purchase, construction, and development of houses, apartments, and commercial properties in India.

The board of Akme Star, as an initiative towards the value creation for shareholders, have declared bonus shares in the ratio of 1:1. If you have one share of Akme Star, you'll get an additional one share.

The shareholders have also approved the proposal for the stock split of one existing equity share of the face value of Rs 10 into two equity shares of the face value of Rs 5.

The company has fixed 16 December 2022 as the record date for both, its subdivision and bonus issue.

In the September 2022 quarter, Akme Star reported 89.7% year-on-year (YoY) growth in revenue at Rs 86.3 million (m). The net profit rose multifold by 483.5% to Rs 21.7 m.

The growth was backed by a quality and risk framework akin to the target segment of Economically Weaker Section (EWS) / low Income Group (LIG) first-time homeowners from semi-urban / rural areas.

For the financial year 2023, the company is planning to expand its presence in Maharashtra. The focus for the expansion will be on residential projects where units qualify the criteria set by CLSS (Credit Linked Subsidy Scheme) guidelines under Pradhan Mantri Awas Yojana.

For more details, see the Akme Star company fact sheet and quarterly results.

#2 Gloster

Second on the list is a textile company Gloster.

The company is a leading manufacturer & exporter of all types of jute & jute allied products for interior decoration & packaging of industrial & agricultural produce.

The company has announced bonus shares of Rs 10 each in the ratio of 1:1, that is, one equity share of Rs 10 each fully paid up for one existing equity share of Rs 10 each.

The board has fixed 17 December 2022 as the record date to ascertain the eligibility of shareholders for the issuance of fully paid-up bonus shares.

In the most recent quarter, the company's revenue grew by 2.5% to Rs 1.9 billion (bn). Net profit came in 27.5% higher at Rs 186.6 m, compared to Rs 146.4 m last year. This was on the back of increasing demand for jute bags in the market.

For the financial year 2023, the company is planning to increase its exports.

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

#3 CL Educate

Third on our list is CL Educate.

The company is a well-diversified and technology-enabled provider of education products and services across the education value chain.

It operates in two segments, namely Consumer Services and Enterprise Services.

The board has approved a bonus issue on the back of strong results declared by the company. The bonus shares are approved in the ratio of 1:1, that is, one equity share of Rs 5 for every one existing share of Rs 5.

The board has fixed 16 December 2022 as the record date to determine the eligibility of shareholders.

For the September 2022 quarter, the company reported a 67.5% YoY jump in revenue to Rs 891.2 m. The net profit for the same period came in 38.8% higher at Rs 45.7 m.

This growth was due to reopening of physical centers and reopening in the Edtech segment and the omnichannel approach adopted by the company.

For the financial year 2023, the company is setting up MarTech business operations in Indonesia through a wholly-owned subsidiary.

For more details, check out the CL Educate company fact sheet and quarterly results.

#4 Precision Wires

Fourth on our list is cable company Precision Wires.

The company is the largest manufacturer of enameled copper winding wires in India.

The company is engaged in manufacturing enameled round and rectangular copper winding wires. Apart from this, it is also the largest producer of winding wires in South Asia.

The board of the company unanimously approved the issue of bonus shares in the ratio of 1:2. One bonus share will be issued for every two existing shares.

The board has fixed 22 December 2022 as the record date to determine the eligibility of shareholders.

For the September 2022 quarter, the company's revenue rose marginally by 2.1% to Rs 7.2 bn.

Net profit declined by 2.1% to Rs 146.6 m. This decline was on the back of the increase in raw material costs and fuel expenses.

With good demand for electric vehicles and green energy, the company will expand its production capacity by 9,000 million tons per annum for the financial year 2023.

For more details, check out the Precision Wires company fact sheet and quarterly results.

#5 Sarthak Industries

Last on our list is Sarthak Industries.

The company is engaged in manufacturing LPG cylinders. At present, the company has a manufacturing capacity of 700,000 cylinders per annum.

Apart from manufacturing, it also undertakes trading activities on an opportunity basis.

With multibagger returns of 2,757% in the past five years, the board has approved bonus issue in the ratio of 1:3. One bonus share will be issued for every three existing shares.

The board has fixed 20 December 2022 as the record date to determine the eligibility of shareholders.

For the September 2022 quarter, the company's revenue declined 73.8% YoY to Rs 115 m.

The net profit stood at Rs 4.1 m, down 96% YoY. This decline was mainly due to decrease in net sales.

For more details, check out the Sarthak Industries factsheet and quarterly results.

Should you invest in stocks announcing bonus shares?

Bonus shares are paid from the company's profits or reserves.

Despite having adequate liquidity, some firms may opt to issue bonus shares to avoid the substantial dividend distribution tax (DDT) payable at the time of dividend declaration.

Another situation when firms could give free bonus shares is when they lack the cash necessary to pay dividends.

In either scenario, bonus shares expand the market's supply of the company's shares.

It should be noted that while profit will stay the same after the company issues bonus shares, its earnings per share (EPS) will decrease.

Despite its advantages and drawbacks, it is worth looking into companies which are issuing 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...