Markets
BSE See NSE See 38,022.23
-314.78 (-0.82%)
collapse Related Readings collapse

Infosys bonus issue and its effect

By rajesh sharma | 6/15/2015 3:24 PM Monday

Share price of Infosys closed on Friday, 12th June 2015 at Rs 1975 but on Monday, 15th June 2015 opened at Rs 977 in NSE. In this article we try to understand, why this happened and its effect on the company.

Earlier, on 25th April 2015, India's second largest IT exporter, Infosys announced bonus issue 1:1, i.e. one equity share for every one-equity share held and final dividend of Rs 29.50 per share, which is equal to Rs. 14.75 per share after bonus issue.

Bonus share are free shares given to the existing shareholders of the company. A bonus issue is taken as a good sign towards future performance of the company. In other words we can say that, management is confidant of being able to increase its profitability to distribute dividends to the increased equity of the company, in future. When a bonus issue is announced, the company also announces a record date for the issue. The record date is the date on which the bonus takes effect, and persons holding shares on that date are entitled to the bonus. After the announcement of the bonus but before the record date, the shares are referred to as cum-bonus. After the record date, when the bonus has been given effect, the shares become ex-bonus.

Friday, 12th June 2015 closing share price of Infosys was Rs 1975. Monday, 15th June 2015, price of share adjusted for the bonus issue and opened at Rs 977 (approximately Rs 1975 divided by 2). 15th June 2015, which is also known as ex-date of bonus and dividend announcement, as its record date is 17th June 2015. Ex-date is the day before two working days of the record date. If you purchase a stock on its ex-bonus or dividend date or after, you will not receive bonus shares or the next dividend payment.

As a result of bonus issue, the number of outstanding Infosys shares will also double and its lot size in derivative market also double. But, their holding (in terms of percentage) in the company remains the same. Also, earnings per share (Earnings Per Share = Net Profit / Number of Shares), falls as more share are outstanding now. The face value of Infosys shares will remain Rs 5 per share post the bonus issue. A bonus issue increases the liquidity of shares in the market and results in increased investor base. Bonus shares are issued from retained earnings, as on 31st March 2015, Infosys's share capital was Rs 572 crore, after bonus issue it will be doubled and the similar amount will be deducted from its retained earnings, which stood at Rs 54191 crore as on 31st March 2015.

 

Find More Articles on: Markets, DSIJ Mindshare

news letter

More for the early bird.

Get the post-market reports and breakfast news right in your inbox. See latest »

DSIJ Mindshare

12345678910Last

Tiger Logistics topline to grow by 10%--buoyant over infra sector status to logistics sector

Tiger Logistics topline to grow by 10%--buoyant over infra sector status to logistics sector

Logistics sector will play a vital role in making the concept of ‘Make in India’ a success. This will be further aided by some of the recent steps taken by Government of India such as granting of infra sector status to logistics sector.

Best and worst Performing Sector Funds of Year 2017

Best and worst Performing Sector Funds of Year 2017

As the year-end has approached most of you are eager to know the mutual fund movers and shakers of the year 2017. Read on to find the performance of various sector dedicated funds.

Markets may start positive, but volatility likely due to F&O expiry

Markets may start positive, but volatility likely due to F&O expiry

The start of the F&O expiry day is likely to be in the green, but volatility may creep in with the progress of the session. The SGX Nifty suggests that the Nifty could open at 10,525 with gains of 32 points at the opening bell. 

Pidilite announces buyback of Rs 500 crore

Pidilite announces buyback of Rs 500 crore

The buyback offer comprises purchase of up to 50,00,000 equity shares. The buyback offer size comprises 0.975 per cent of the total paid-up equity capital of the company.

Bank Nifty drags markets to close in the red

Bank Nifty drags markets to close in the red

The late session fall in Bank Nifty changed the direction of the market, leading to a marginal fall in the benchmark indices. Bank Nifty yet again resisted at its multiple point downward sloping trendline level at 25733.

Six major underperforming MF schemes having higher expense ratios

Six major underperforming MF schemes having higher expense ratios

Mutual funds with a large size of assets under management (AUMs) are supposed to have lower expense ratios. However, there are schemes with large AUMs but having higher expense ratios and generating lower returns. 

Nifty Pharma supports market; Sun Pharma at bullish reversal

Nifty Pharma supports market; Sun Pharma at bullish reversal

Nifty Pharma index has come in as the healer in an otherwise sluggish market. Index has given a consolidation breakout at the 9420 level today and if the it sustains 9420, followed by 9628 on the upside, it has a long way to go.

Ten stocks close to their 52-week low

Ten stocks close to their 52-week low

Following stocks are close to their 52-week low as at 12.35 p.m. on December 27.

Ten stocks close to their 52-week high

Ten stocks close to their 52-week high

The markets on December 27 opened gap down. BSE Sensex is trading at 34,068.15, up by 57.54 points and the Nifty is trading at 10,539.45, up by 7.95 points.

Five stocks with selling interest

Five stocks with selling interest

Overall volumes in futures & options currently stand at 62.75 lakh contracts with a turnover of Rs. 5,19,204.72 crore.