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

Many economists and investors anticipated 2023 to be a tumultuous year. They couldn't have been more right.

Given the prevailing inflationary pressures and the Federal Reserve's unwavering commitment to combating them, the trajectory of stock markets remains uncertain.

Consequently, many investors are skeptical about suitable investment avenues in 2023.

While investing inherently involves risk, particularly when pursuing higher rewards, diligent research can yield substantial gains.

One such way is to take a close look at the stocks declaring bonus shares and stock splits. This is because both these corporate actions have a material impact on the company's stock price.

Usually, these companies remain in focus for the next couple of months after they've undergone a stock split or declared bonus shares.

Keeping that in mind, here are three stocks that are set to declare bonus shares and stock splits in June 2023.

#1 Hardwyn India

First, on the list is Hardwyn India.

The company is a multiproduct trading and distribution company dealing in a wide range of aluminum and textile products.

On 26 April 2023, the company's board decided to split shares in a ratio of 1:10. It means each equity share of the company with a face value of Rs 10 will be split into 10 equity shares with a face value of Rs 1 each.

The board of directors, in the same meeting, also approved the proposal to recommend the issue of bonus shares in the ratio of 1:3. This means one bonus share of Rs 1 each for every three existing shares.

The board has fixed 5 June 2023 as the record date for the stock split and bonus issue.

This is the second bonus issue within a year announced by the company. Previously in July 2022, the company had issued bonus shares in a ratio of 1:2 i.e., one bonus share for every two shares held by its investors.

For the December 2022 quarter, the company's revenue came in at Rs 347.3 million (m). It reported a net profit of Rs 32.7 m. This was due to an increase in demand for the products.

For the upcoming quarters, the company is looking at increasing its sales in residential and commercial space.

Hardwyn India shares have delivered multibagger returns of 133.5% in the past one year.

For more details, see the Hardwyn India company fact sheet and quarterly results

#2 IndiaMART InterMESH

Second on the list is IndiaMART InterMESH.

With a 60% market share of the Indian online B2B classified industry, IndiaMART is the largest B2B marketplace in the country. It connects buyers and sellers across product categories and geographies in India through business enablement solutions.

The company's board of directors on 28 April 2023 approved the proposal to recommend bonus shares in the ratio of 1:1. This means one bonus share of Rs 10 each for every one existing share.

The board has fixed 21 June 2023 as the record date to determine the eligibility of shareholders.

For the March 2023 quarter, IndiaMART InterMESH reported a revenue of Rs 2.7 bn, up 33% YoY. The net profit for the same period came 30% higher on a YoY basis at Rs 2.9 bn.

The company has also recommended a final dividend of Rs 20 per equity share of face value of Rs 10 each for the financial year 2023.

Going forward the management is confident of adding over 8,000 paying subscribers in each quarter in the financial year 2023-24.

At a time has the Indian stock market was lagging behind its global peers this year, shares of IndiaMART InterMESH have gained about 32% so far.

The e-commerce company has been gaining since December 2022 after if posted strong Q3 results.

For more details, see the IndiaMART InterMESH company fact sheet and quarterly results.

#3 Radhagobind Commercial

Last on the list is Radhagobind Commercial.

Radhagobind Commercial is a smallcap company that engages in the consumer discretionary goods and services (CDGS) sector.

The company's primary source of income is from its trade in fabrication materials, which is its main line of business.

The company's board, on 24 February 2023, approved the stock split of the shares in a ratio of 10:1. This means that for every share of Rs 10 that shareholders hold, they will receive ten shares of Rs 1 each.

The company reported a revenue of Rs 1 million in the March 2023 quarter while its net loss came in at Rs 5 m. Going forward, the company plans to turn profitable by increasing is geographical reach.

For more details, see the Radhagobind Commercial 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...