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

In an uncertain or volatile market, companies constantly look for new ways to reward shareholders and attract new investors. (Think special dividend or interim dividends).

Apart from rewarding shareholders with dividend, two other highly effective methods that have stood the test of time are bonuses and stock splits.

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

As of 1 July 2023, an impressive 35 companies have already announced their intention to issue bonus shares, based on data from the BSE. Bonus shares are given to investors as complimentary shares in proportion to their current holdings.

Furthermore, as of 24 July 2023, the BSE has reported that 17 companies in India have announced their plans for stock splits. A stock split involves dividing the existing shares into multiple shares while maintaining the overall value of the shares. This move aims to make the stock more affordable and accessible to more small-sized investors.

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

#1 Kamdhenu Ventures

First on the list is Kamdhenu Ventures.

The company makes decorative paint products. Its product offerings include exterior and interior emulsions, acrylic distempers, and water-based and solvent primers.

The board of Kamdhenu Ventures on 28 June 2023 approved a proposal to issue bonus shares to its investors in the proportion of 1:1. It means 1 bonus equity share (fully paid-up) of Rs 5 each will be paid out for every one existing equity share of Rs 5 each, held by the shareholders as on the record date.

The record date for the same is 1 August 2023.

For the financial year 2023, the company recorded a 10% YoY jump in revenue at Rs 2.5 billion (bn). The company reported a net loss of Rs 103 million (m), down from Rs 127 m a year back. This was due to lower raw material costs and an increase in sales.

Going ahead, the company is focusing on image building through aggressive branding and marketing of paint products.

For more details, see the Kamdhenu Ventures company fact sheet and quarterly results.

#2 Lancor Holdings

Second on the list is Lancor Holdings.

The company operates as a property development company in India. The company is engaged in the construction and sale of residential and leasing of commercial properties.

The company's board of directors on 14 July 2023 approved the proposal to recommend bonus shares in the ratio of 1:2. This means two bonus shares for every one existing share.

The board has fixed 18 August 2023 as the record date to determine the eligibility of shareholders.

For the March 2023 quarter, the company reported a revenue of Rs 265 m, marginally up from Rs 263.1 m a year back. The company reported a net loss of Rs 38 m.

This was due to an improvement in realisation due to a decrease in manufacturing costs.

Going forward, the company is planning to increase its market share by taking on several new initiatives.

For more details, see the Lancor Holdings company fact sheet and quarterly results.

#3 Sarda Energy and Minerals

Third on the list is Sarda Energy and minerals.

Sarda Energy and Minerals is the flagship company of Sarda Group. The company is a manufacturer and exporter of niche-grade manganese-based ferroalloys.

The company's board on 27 May 2023, approved the stock split of shares in the ratio of 1:1. This means that for every share held, shareholders will receive an additional share for free.

The record date for the same is 4 August 2023.

For the March 2023 quarter, Sarda Energy and Minerals reported a 1.7% YoY jump to Rs 10.8 bn. The net profit for the quarter came in at Rs 1.2 bn, down 43.2% YoY.

This decline was due to an increase in the stockpile and other expenses of the company.

The company is a part of Sunil Singhania's portfolio.

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

Also, the removal of export duty on steel products will help the metal producers pull up their profits by exploring more overseas markets.

For more details, see the Sarda Energy & Minerals company fact sheet and quarterly results

#4 BCL Industries

Fourth on the list is BCL Industries.

BCL Industries is a part of the Mittal Group, engaged in diversified businesses. The company manufactures various edible oils. It is also in the business of manufacturing ethanol, extra neutral alcohol (ENA) and bottling of liquor in Punjab.

BCL has also forayed into the business of real estate as a part of the risk mitigation strategy and to monetise the land bank of the company.

The board of the company, on 31 May 2023, approved a proposal to split its shares in the proportion of 1:10.

The board approved splitting the face value of shares from Rs 10 to Rs 1 per share.

The record date for the proposed stock split will be announced post the board meeting.

For the March 2023 quarter, the company reported a 9.6% YoY jump in revenue at Rs 4.6 bn. The net profit for the quarter came in at Rs 4.5 bn, up 20.6% YoY to higher sales in the edible oil segment.

Going ahead, the company is working on increasing its market share in the ethanol segment.

For more details, see the BCL Industries company fact sheet and quarterly results.

#5 Nintec Systems

Last on the list is Nintec Systems.

Nintec Systems is a global technology company specialising in software development and solutions.

The company offers business analytics, cloud, application engineering, and testing services.

The board of the company, on 20 June 2023, declared a bonus issue in the proportion of 4:5.

This means four bonus equity shares of Rs 10 each for every five fully paid-up equity shares held on the record date.

The record date to ascertain the eligibility of the shareholders to receive bonus shares will be informed in due course. The company has informed well in advance about the bonus issue and the record date could be set somewhere in August 2023.

For the financial 2023, the company reported a 72% YoY jump in revenue to Rs 104.1 m. The net profit for the quarter came in at 19.2 m, up 125% YoY.

Going forward, Nintec Systems is looking to expand its product and service offerings to tap into new growth opportunities.

The company is particularly interested in expanding its offerings in cloud computing and artificial intelligence (AI) space.

For more details, see the Nintec Systems 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...