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

Investing in the stock market offers a wealth of opportunities, yet many potential investors shy away, letting the fear of losses outweigh the potential for significant gains.

So, why do so many avoid the stock market? Is it the inherent risk, or the uncertainty of navigating such a complex financial landscape?

While it's true that risk is part of the equation, particularly when the rewards are high, it's also true that with diligent research and a solid strategy, the stock market can offer far more rewards than regrets.

One aspect that attracts retail investors is the appeal of stock bonuses and stock splits. But what exactly makes these events so enticing?

In both cases, shareholders see an increase in the number of shares they hold, while the stock price adjusts downward in proportion.

Although the share price drops post-bonus and post-split, the wealth effect is neutral as the number of shares increases, balancing out the equation.

So, while stock bonuses and splits don't change the intrinsic value of the investment, they offer psychological benefits to investors, making the stock more affordable and potentially more attractive to new buyers.

In today's article, we will look at three companies to watch out for in October 2024.

#1 Integrated Industries

First on the list is Integrated Industries.

Integrated Industries is engaged in the sale of bakery items, processed foods, and both organic and inorganic food products. The company distributes its products throughout the whole North Indian region, including J&K.

The product is well-liked not only in the domestic market but also in foreign markets, including the UAE, Somalia, Tanzania, Kuwait, and more.

In light of its impressive performance, Integrated Industries has announced a stock split in the ratio of 10:1, converting one fully paid equity share of Rs 10 into ten fully paid equity shares of Re 1 each.

This is intended to enhance shareholder participation and liquidity by increasing the number of shares available for trading, thereby potentially boosting market interest.

The record date for the same is 1 October 2024.

Before this, the shares of the company ex-traded bonus shares in the ratio 1:1 i.e., Issue of 1 bonus equity shares having a face value of Rs 10 for every 1 fully paid-up equity share having a face value of Rs 10.

Ex-date for bonus shares was 16 April 2024.

For the June 2024 quarter, its sales jumped 619.5% to Rs 1.4 bn against Rs 194.7 m a year back.

The company's net profit climbed to Rs 129.8 m against Rs 11.7 m in the same quarter last year.

Further, it recently launched a new range of biscuits by its subsidiary, Nurture Well.

The company's brand Richlite Bourbon which will be launched in India and Middle East countries.

Going forward, the company plans to increase its overseas presence.

For more details, see the Integrated tech company fact sheet and quarterly results.

#2 Power Mech Projects

Next on the list is Power Mech Projects.

Power Mech Projects Limited is a leading infrastructure-construction companies based in Hyderabad, India with a global presence and is highly credited with providing a spectrum of services in the power and infrastructure sectors.

The company has announced a bonus issue in a ratio of 1:1 means that Power Mech will allot 1 new fully paid-up equity share of Rs 10 each issued for every 1 fully paid-up equity share of Rs 10 each.

The company has revised its bonus issue record date to Tuesday, 8 October 2024.

This will be the first time the company has issued bonus shares. It has never split its stock either but it has paid dividends.

The company will pay a final dividend of Rs 2 per share or 20% for the financial year 2023-24. The record date and ex-dividend date are set on 20 September 2024.

As per the regulatory filing, Power Mech recently received an order worth Rs 8.7 bn from Talwandi Sabo Power Limited, a subsidiary of Vedanta Limited.

The order includes operations and maintenance of a 3X660 MW supercritical thermal power plant. The timeframe for completing the order is 5 years with effect from 1 November 2024.

Power Mech Projects reported its June quarter results earlier this week where its net profit increased by 21% on a year-on-year basis, while its revenue increased by 16.4%.

For more details, see the Power Mech Projects company fact sheet and quarterly results.

#3 Rajnish Retail

Last on the list is Rajnish Retail.

The company is engaged in the manufacture and trading of diamonds and diamond jewellery in India and internationally.

The company had in June announced its plans to sub-divided its shares. Rajnish Retail had said that its board of directors has approved a sub-division/split of 1 equity share into 5 equity shares, i.e., in a ratio of 5:1.

The record date for the same is 11 October 2024.

For the June 2024 quarter, its revenue came in at Rs 133.3 m, while the net profit came in at Rs 5.1 m.

Earlier this year, the company had expanded its portfolio by venturing into the beauty and wellness industry with the launch of a new salon.

This strategic move is aimed at capitalising on a growing market and diversifying the business. Urban Salon, a brand of Rajnish Retail Limited, has opened a new shop in Evershine Nagar, Malad District of Mumbai.

Going forward, the company plans to focus on geographic expansion.

For more details, see the Sheetal Diamonds 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. One drawback to consider is the potential dilution of earnings per share if the company's profits do not increase.

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...