India Inc declared 23 % more bonus share issues in FY11

Written by Pradip Kumar Dey | Mumbai | Updated: Apr 29 2011, 08:43am hrs
Corporate India was more liberal in issuing bonus shares in 2010-11. Around 91 companies gave bonus shares during 2010-11, which is 23% more than 2009-10. Forty five companies announced 1:1 bonus issues during 2010-11 while eleven companies issued 1:2 bonus. In comparison, during 2009-10, 32 companies issued 1:1 bonus shares and 7 companies 1:2. Among PSU giants, only ONGC (1:1) and MMTC (1:1) announced bonus issues in 2010-11.

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.