4 Stocks to Watch Out for Bonus Shares and Stock Splits in September 2023

As market uncertainties persist, receiving something for free makes bonus share and stock split issues a welcome move for investors.

It's 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 four stocks that are set to declare bonus shares and stock splits in September 2023.

#1 Hindustan Aeronautics

First on the list is Hindustan Aeronautics.

Hindustan Aeronautics Ltd (HAL) manufactures and maintains aircraft and helicopters for the Indian Airforce, Indian Army, ISRO, Indian Navy, and Indian Coast Guard, among others.

Recently, HAL signed a US$ 716 m deal with GE Aviation for the supplies of engines.

The company's board on 27 June 2023, approved the stock split of shares in the ratio of 1:2. This means that one share of face value of Rs 10 would be split into two equity shares of Rs 5. The record date for the stock split is 29 September 2023.

Additionally, the board has also declared a final dividend of Rs 15 per share for the financial year 2023.

For the June 2023 quarter, the company reported an 8% jump in revenue at Rs 39.2 bn. Its consolidated net profit stood at Rs 8.1 bn in the first quarter of FY24, a growth of about 31% year-on-year (YoY) from Rs 6.2 bn clocked in the same quarter last year, on back-to-back order wins.

Going forward, HAL is seeking collaborations with foreign Original Equipment Manufacturers (OEMs).

Additionally, the production of GE-414 engines to power the Tejas Mk 2 aircraft with General Electric (GE) will be an added benefit.

To know more about Hindustan Aeronautics, see its fact sheet and quarterly results

#2 GNA Axles

Second on the list is GNA Axles.

The company manufactures auto components such as rear axles, shafts, and spindles for the four-wheeler industry, especially commercial vehicles, having a leading market share of over 50% for the majority of its products in the Indian market.

The company's board of directors on 21 July 2023 approved the proposal to recommend bonus shares in the ratio of 1:1. This means one bonus share for every one existing share.

The board has fixed 2 September 2023 as the record date to determine the eligibility of shareholders.

A total of 21.4 m equity shares of Rs 10 each are proposed to be issued through the bonus share issue.

For the March 2023 quarter, the company reported a revenue of Rs 3.7 bn, marginally down from Rs 3.8 bn a year back. The company reported a net profit of Rs 331.2 m, up 22.6% YoY, due to cost reduction initiatives.

Going forward, growth in the US truck market segment and new product developments are expected to drive revenue in the medium term.

To know more about GNA Axles, see its factsheet and latest quarterly results.

#3 Lancer Container Lines

Third on the list is Lancer Container Lines.

Lancer Container Lines provides integrated shipping and logistics solutions. It is engaged in the coastal water transport services of intermodal containers by container ships and the sale of second-hand shipping containers.

The board of Lancer Container Lines on 10 August 2023 approved a proposal to issue bonus shares to its investors in the proportion of 2:1. Therefore, two bonus equity shares of the face value of Rs 5 each will be allotted for every equity share held by its shareholders on the record date.

The record date for the same is 23 September 2023.

For the June 2023 quarter, the company reported a 29% YoY decline in revenue to Rs 1.6 bn. The net profit for the quarter rose 6.3% YoY to Rs 141.2 m due to decreasing expenses.

Going forward, the company plans to double its container capacity from the current 14,000 to above 20,000 Twenty-foot Equivalent units (TEU) this year.

To know more about Lancer Containers Lines, see its fact sheet and quarterly results.

#4 Power Grid Corporation

Last on the list is Power Grid Corporation.

From humble beginnings in 1989, it has grown to become the largest power transmission company in India.

By carrying electricity through its nationwide grid network, Power Grid acts as a connecting factor between power-generating companies and power-trading companies.

The company's board of directors on 31 July 2023 approved the proposal to recommend bonus shares in the ratio of 1:3. This means that for every three shares investors hold, they will get one additional share.

The board has fixed 25 September 2023 as the record date to determine the eligibility of shareholders.

For the March 2023 quarter, the company reported a revenue of Rs 110.5 bn, marginally up from Rs 109.1 bn a year back on the back of the cost-plus tariff structure. The company reported a 5% YoY fall in net profit.

Going forward, growth in renewable energy capacity, EV charging network, and 5G telecom is expected to drive Power Grid's revenue and profitability.

To know more about Power Grid Corporation, see its factsheet and latest 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...