An analyst from a domestic broking firm said, giving bonus means servicing the expanded equity base by paying dividend in future. He reasoned that unless the company is confident about the future demand and profitability of its business it will not declare bonus.
Bonus declaration while making small investors happy, also leads to zero value addition to the companys balance sheet and fundamentals. However, technically speaking, the investor stands to gain in case of dividend pay outs as dividends are made as a percentage of the shares face value.
Among the industries, automobiles, IT, construction, NBFC, electric equipment, packaging, textiles and trading declared the maximum number of bonus shares during 2010-11.
Among non-banking financial comapnies , nine declared bonus in 2010-11against six in 2009-10. In textiles, number of companies declaring bonus during 2010-11 was seven against four in 2009-10.