Top 3 Stocks to Watch Out for Bonus Shares and Stock Splits in January 2024

The much-awaited Q3 earnings season in India is upon us, and this time, this time it's not typical numbers game.

However, this time around, the spotlight isn't solely fixated on the traditional bottom-line figures. Instead, the stage is set for corporate actions, where bonus shares and stock splits take centre stage.

Bonus shares and stock splits are exciting events for investors because they have a material impact on the company's stock price.

Both mechanisms serve as potent tools to bolster shareholder confidence, stimulate trading activity, and maintain an equitable distribution of wealth.

Shares of the companies declaring bonus shares or stock splits continue to remain in focus for at least a month after their corporate action activity.

In today's article, we'll take a look at three companies to watch out for in January 2023.

#1 Network People Services Technologies

First on the list is Network People Services Technologies.

The company is in the business of providing software and mobility solutions to the banking and finance sector, with a key focus on payments and smart transaction solutions.

Its primary focus is financial technology, it has built a multi-layered solution for the cashless economy. Other than software, NPST is into the delivery of aggregated services (merchant platform) to citizens through multiple channels.

The board of directors on Tuesday, 26 December 2023, recommended a bonus issue of equity shares in the ratio of 2:1. This means two new bonus equity shares of Rs. 10 each for every one existing fully paid-up equity share of Rs 10 each.

The board has fixed 22 January 2024 as the record date to determine the eligibility of shareholders.

For the September 2023 quarter, its net revenue increased by 477% year on year to Rs 520 m, from Rs 90 m in Q2FY23.

Furthermore, the company's net profit increased by 900% year on year (YoY), from a net profit of Rs 10 m in September 2022 quarter to a net profit of Rs 100 m in September 2023 quarter.

According to half-yearly results, the net sales increased by 470% to Rs 520 m, and net profit skyrocketed by 900% to Rs 100 m in H1FY24 compared to H1FY23.

Going forward, the company plans to expand its reach in Indian markets.

For more details, see the Network People Services Technologies company fact sheet and quarterly results.

#2 Ishan International

Second on the list is Ishan International.

Ishan International works on construction and contracting projects with an emphasis on providing machinery, commissioning, erection/installation, and operational training for pharmaceutical, sugar, and jaggery plants.

The company is planning to increase its authorised share capital from Rs 10 crore (divided into 10 m equity shares with a face value of Rs 10 each) to Rs 230 m. This involves creating an additional 13 m equity shares with a face value of Rs 10 each, resulting in a total of 23 m equity shares.

Furthermore, there will be a stock split or subdivision 1:10 ratio, where one existing Rs 10 face value equity share, fully paid-up, will be split into 10 equity shares with a face value of Rs 1 each. This change will apply to shareholders as of the record date.

Additionally, the company plans to issue bonus shares in a 2:1 ratio. This means shareholders will receive two equity shares with a face value of Rs 1 each for every one equity share with a face value of Rs 1 each they currently hold.

The record date for the same is 25 January 2024.

For the September 2023 quarter, its revenue decreased by 32% from Rs 133.6 m in September 2022 quarter to Rs 90.1 m in September 2023 quarter. During the same period, net profit increased by 102% from a loss of Rs 6.7 m to a profit of Rs 0.2 m.

Going forward, following a detailed evaluation of potential advantages and risks, the Board of Directors is endorsing the progression of the joint venture.

For more details, see the Ishan International company fact sheet and quarterly results.

#3 Dolphin Offshore Enterprises

Last on the list is Dolphin Offshore Enterprises.

Dolphin Offshore Enterprises India offers marine services to the offshore oil and gas industry. The company offers diving and underwater services, installs equipment on offshore platforms and drilling rigs, operates dumb barges, tugboats and offshore supply vessels, and repairs ships and drilling rigs.

The company's board, on 7 December 2023, approved the stock split of the shares in a ratio of 1:10.

This means that 1 Dolphin Share, having a face value of Rs 10 each will be subdivided into ten equity shares of Dolphin, having a face value of Re 1 each.

The record date for the same is 25 January 2024.

For the September 2023 quarter, its net revenue increased by 197% to Rs 20 m. While the net profit increased by 2,615% to Rs 35.3 m in Q2FY24 compared to Q1FY24.

Dolphin aims to become a significant player in the deepwater oil and gas extraction market, currently dominated by foreign companies.

For more details, see the Dolphin Offshore 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...