Top 5 Stocks to Watch Out for Bonus Shares and Stock Splits in October 2023

If you have been in the stock markets for some time, you would have heard the famous story of how Wipro could have made you a millionaire many times over in the last three decades with its 11 bonuses and 2 stop splits.

Did the bonus issues create wealth or was it stock splits?

The answer is neither.

While bonuses and splits are value-neutral, it was primarily the financial performance that helped create wealth. What bonuses and splits have done is kept the stock price of Wipro within an acceptable range to elicit investor interest.

For investors in the hunt for such corporations, here are 5 stocks to watch out for bonus shares and stock splits in October 2023.

#1 RMC Switchgears

First up, we have RMC Switchgears.

RMC Switchgears specialises in the design and manufacturing of energy meter enclosures, LT/HT distribution boxes and panels, junction boxes, and more.

On 21 July 2023, the company's board of directors approved a proposal to recommend bonus shares at a ratio of 1:2, translating to one bonus share for every two existing shares.

This marks the company's inaugural bonus share issuance. RMC Switchgears has set October 13, 2023, as the record date to determine the eligibility of shareholders entitled to receive the bonus shares.

Impressively, the company has experienced a substantial 204% year-on-year increase in revenue, surging from Rs 410 million (m) in FY 21-22 to Rs 1.3 billion (bn) in FY 22-23. Concurrently, its net profit has soared by 1100%, rising from Rs 10 m to Rs 120 m, attributed to cost reductions.

RMC Switchgears recently inked a Memorandum of Understanding (MoU) with Radius Synergies International for a five-year collaboration focusing on knowledge sharing, capacity building, global outreach for IT automation solutions, techno-commercial studies and analysis, and the promotion of best practices.

Looking ahead, the company is strategically planning to expand its product range and strengthen its global presence.

To know more, check out RMC Switchgears company fact sheet and quarterly results

#2 Jonjua Overseas

Next in line is Jonjua Overseas.

Jonjua Overseas is engaged in diverse sectors, including service exports, corporate consultancy, agriculture, organic manure, marketing materials, and other products.

On 5 October 2023, the board of Shri Venkatesh Refineries approved a proposal to issue bonus shares to its investors at a ratio of 9:50, meaning that it will issue nine equity shares for every fifty existing equity shares.

The record date for the same is 10 October 2023.

In the financial year 2023, the company reported a robust 14.9% year-on-year increase in revenue, reaching Rs 36.1 m.

Net profit for the same year also witnessed a solid 11.3% year-on-year growth, amounting to Rs 11.8 m, driven by increased sales.

Jonjua Overseas has ambitious plans to expand its service portfolio, including ventures into e-commerce consulting and other diverse offerings.

To know more, check out Jonjua Overseas company fact sheet and quarterly results.

#3 Sigachi Industries

Our third contender is Sigachi Industries.

Sigachi Industries is one of the largest manufacturers of microcrystalline cellulose (MC), a versatile material with applications in the pharmaceutical, food, nutraceuticals, and cosmetic industries.

The company made its stock market debut on Dalal Street in November 2021.

Sigachi Industries' board approved a 1:10 sub-division of its equity shares, which means each share with a face value of Rs 10 will be split into ten equity shares, each with a face value of Rs 1, effective 11 September 2023.

The record date for the stock split is 9 October 2023.

In the June 2023 quarter, the company reported a revenue of Rs 847 m, reflecting an impressive 8.2% increase from Rs 783.1 m a year back.

Despite this, quarterly net profit for June 2023 stood at Rs 108.8 m, a 15.14% decline compared to Rs 128.2 m in June 2022, attributed to growing demand.

Sigachi Industries has expanded its horizons by acquiring an 80% stake in the API manufacturing company Trimax BioSciences.

Looking forward, Sigachi Industries envisions expanding its product range to include new offerings such as solar panel chemicals and pharmaceutical intermediates.

To know more, check out Sigachi Industries company fact sheet and quarterly results.

#4 Talbros Automotive

Next on the list is Talbros Automotive.

Talbros Automotive is engaged in manufacturing gaskets and forging that are supplied to original equipment manufacturers (OEMs) and the aftermarket.

The company has a majority share of over 50% in India in the gaskets division. It has aggressively invested in BS VI technology and is also focusing on post-coating lines, which leads to lower imports and higher cost savings.

The board considered and approved a sub-division or split of existing equity shares from one share having a face value of Rs 10 each fully paid up into five equity shares of face value of Rs 2 each, fully paid up, translating to a split ratio of 1:5.

The record date for the same is 27 October 2023.

Its total income increased by 20% to Rs 1.9 bn in the June-ended quarter compared to Rs 1.5 bn in the corresponding quarter of last year.

The auto components maker's consolidated net profit jumped 46.3% on a year-on-year basis to Rs 174 m in the June quarter from Rs 119 m in the same period last year on the back of a strong order book.

Going forward, the company aims to leverage its capability to convert castings into forgings and increase its focus on electric vehicles.

The company is also strengthening its EV portfolio. It secured orders from leading OEMs both domestically and globally.

To know more, check out Talbros Automotive's financial factsheet and quarterly results.

#5 BCL Industries

Last on the list is BCL Industries.

The small-cap company has declared a stock split in the ratio of 1:10. This means a subdivision of one share of the company with a face value of Rs 10 each to ten company shares with a face value of Rs 1 per share.

The company board has fixed a stock split record date on 27th October 2023.

The primary objective behind implementing this stock split is to enhance the liquidity of BCL Industries' stock.

For the June 2023 quarter, BCL Industries reported a revenue of Rs 4.3 bn, up 14.4% YoY from Rs 3.7 bn a year back. Net profit for the quarter came in at Rs 186.2 m, up 4.8%, on back-to-back order wins.

Recently, the board decided to terminate the lease for the Jalalabad unit and shut down the Bathinda edible oil unit shortly. A part of Bathinda's edible oil business will move to the Bathinda distillery complex.

Going forward, the company intends to launch a 200klpd ethanol plant in Punjab.

To know more, check out BCL Industries company fact sheet and quarterly results.

Should You Invest in Stocks Declaring Bonus Shares and Stock Splits?

Investing in stocks that announce bonus shares and stock splits can be an appealing option for some investors.

These actions can increase liquidity, generate positive market sentiment, and potentially make the stock more affordable for a wider range of investors.

However, it does not guarantee profitability in all cases. One drawback to consider is the potential dilution of earnings per share if the company's profits do not increase proportionally.

Therefore, it's important to consider the company's fundamentals, such as financial performance and growth prospects, before making investment decisions solely based on bonus shares and stock splits.

Dilution concerns and individual circumstances should also be considered.

For the companies with long history of issuing bonus shares, check out 5 Indian companies which have consistently declared bonus shares.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...