Upcoming Bonus Shares 2022: What exactly is a Bonus Issue?

Table of contents

• What is a bonus issue in the stock market?
• What is a stock split in the stock market?
• List of upcoming bonus shares in 2022 in India
• FAQs

Key Takeaways

• Companies can issue bonus shares to encourage retail involvement.
• Issuing bonus shares is a positive thing because it signifies that the company is committed to long-term growth.
• After receiving bonus shares the shareholders' total investment amount will remain the same.

Companies listed in the stock market take specific decisions depending current market scenario. The result of this decision affects the share price or the stocks of the companies in the market. Sometimes these companies take decisions such as paying dividends to the shareholders, issuing bonus shares, or announcing stock splits.

What is a bonus issue in the stock market?

A bonus issue is a situation where any particular company distributes free shares to the shareholders. For example, XYZ company has decided to provide a 3:1 bonus issue for its shareholders, which means for every one XYZ company share you hold, you will be given 3 additional shares (for free). However, the stock prices are also reduced in a proportional way so that the total value of your investment will remain constant.

Suppose, earlier you had 5 shares of the company and the total value of those 5 stocks is 100 rupees. After the bonus issue, you have a total of 10 stocks of the same company (since the bonus issue is 1:1) but the total share value will remain the same, which is in this case Rs. 100. Therefore, each stock of the same company is priced at Rs. 10. Normally, a company issue bonus shares when it wants to reduce the price of its shares and support the retail association.

What is a stock split in the stock market?

When a company announces a stock split it literally means to do the same. If you are holding one share worth Rs. 100 of ABC company and it has announced a stock split of 1:4, that means you will now possess a total of 4 shares. However, the value of each stock will become Rs. 25 which means your total investment value will remain the same. Bonus Issue and stock split both are used for the same reason, which is to encourage retail involvement.

List of upcoming bonus shares in 2022 in India

Here is a list of companies with upcoming bonus shares 2022:

Disclaimer: The securities quoted are exemplary and not recommendatory. Past performance is not indicative of future returns