Companies usually announce a bonus issue to reflect a position of financial health, boost investments and reward shareholders. A bonus issue makes a stock attractive for retail investors and provides an alternative to cash dividends.
Here are two small-cap stocks that have announced a bonus issue:
Gulshan Polyols Ltd :
Gulshan Polyols is one of the largest manufacturers of Precipitated Calcium Carbonate and Sorbitol in India.
According to an exchange filing, the company has fixed Wednesday, June 21, 2023, as the record date for determining the eligibility of its shareholders for its upcoming bonus issue. It has announced a bonus issue in the ratio of 1:5, subject to shareholder approval. Therefore, eligible shareholders will receive one bonus equity share for every five shares that they hold in the company.
Gulshan Polyols is a small-cap company with a market capitalization of ₹ 1,424 crores. It has a low return on equity of 8.14% but an ideal debt-to-equity ratio of 0.44. Its shares were trading at a price-to-earnings ratio of 31.39 which is higher than the industry P/E of 16.24, indicating that the stock might be overvalued as compared to its peers.
Roto Pumps Ltd :
Incorporated in 1968, Roto Pumps is the pioneer manufacturer of progressive cavity pumps in India, renowned for providing efficient and reliable pumping solutions to a diverse range of industries.
According to an exchange filing, the company has announced a bonus issue in the ratio of 1:1. i.e., eligible shareholders will receive one bonus equity share for every equity share that they already hold in the company. It has fixed July 08, 2023, as the record date for determining the eligibility of its shareholders for the bonus issue.
Roto Pumps is a small-cap company with a market capitalization of ₹ 1,077 crores. It has an ideal return on equity of 22.30% and an ideal debt-to-equity ratio of 0.34. Its shares were trading at a price-to-earnings ratio of 32.51 which is higher than the industry P/E of 26.70, indicating that the stock might be overvalued as compared to its peers.
Written By Simran Bafna
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