Bonus Issue:Gujarat Toolroom Limited (Gujarat Toolroom) may soon announce a bonus issue for its shareholders. The company’s board meeting is scheduled to be held on January 6, in which a decision on this proposal will be taken. The company has given this information in its exchange filing today on January 1. After this news, huge buying was seen in the shares of Gujarat Toolroom today and it hit upper circuit. This stock closed at Rs 17.22 on BSE with a gain of 5 percent. With this rise the market cap of the company increased to Rs 399.62 crore.
What did Gujarat Toolroom say in its exchange filing?
Gujarat Toolroom will hold its board meeting on Monday, January 6, 2025, according to an exchange filing. The company will take a decision on the proposal to issue bonus shares in the ratio of 5:1. This means that if this proposal is approved then shareholders will be issued 5 bonus shares for every 1 share held. As per the data available on BSE, this is the first time that the company is going to issue bonus shares to its shareholders.
Record date not decided yet
The record date for the bonus issue has not been decided yet. Only those investors who purchase shares before the ex-date will be eligible for bonus shares. If an investor purchases shares on or after the ex-date, he will not be eligible to receive bonus shares.
Bonus shares are given free of cost by a company to its existing shareholders. It is generally given to increase the earnings per share of the company, increase the capital base and reduce the free reserves. These shares are issued without any additional cost to the shareholders and hence they are also called free shares.
The company has already done stock split
Let us inform you that Gujarat Toolroom split its shares on March 6, 2023, in which each share of ₹ 10 face value was divided into 10 shares of ₹ 1 face value. A stock split is typically done by a company to increase its outstanding shares.
Usually, when the shares of a company become very expensive, small investors are not able to invest in those shares. In such a situation the company splits its shares. The company resorts to stock split to attract small investors and increase demand in the market. Stock splits and issuance of bonus shares do not change the total market cap of the company, but may reduce the price per share and increase the number of shares outstanding, thereby improving liquidity for investors.
Disclaimer: The information provided here is for information only. It is important to mention here that investing in the market is subject to market risks. As an investor, always consult an expert before investing money. Moneycontrol never advises anyone to invest money here.