Top Indian Companies That Give Good Bonus Shares
What are bonus shares?
Bonus shares, sometimes referred to as bonus issues are shares that shareholders receive as a bonus without any extra charges. The number of bonus shares an individual receives depends on the number of shares they hold in the company giving the shares.
Usually, companies issue bonus shares when they have good reserves and want to incentivize their shareholders without affecting their cash flow. In order to encourage retail involvement, companies issue bonus shares frequently. This also serves another purpose for the company, which is to expand its equity base.
Factors such as the company’s financial stability, growth prospects, and shareholder tactics influence the decision to issue bonus shares. Let us know about some companies known for regularly providing bonus shares.
Top companies providing tempting bonus shares in India
1. Reliance Industries
Since its establishment, the company has issued bonus shares a total of four times. The initial bonus shares were announced in 1983 with a ratio of 3:5, and the most recent bonus shares were declared in 2017 with a ratio of 1:1.
2. ITC
ITC, a company known for regular bonus stock offerings in India, has granted bonus shares three times between 2005 and 2016. Their most recent bonus allocation was in 2016, with a ratio of 1:2 for bonus shares.
3. Tata Consultancy Service
Tata Consultancy Services has issued bonus shares three times between 2006 and 2018, with the most recent bonus share issue taking place in 2018 at a ratio of 1:1.
4. Infosys
The company has awarded bonus shares to its shareholders five times since 2000, making it a consistent provider of bonuses in the Indian stock market. The most recent distribution took place in 2018, with the company announcing a bonus issue at a 1:1 ratio.
5. Wipro
Wipro has granted bonus shares to its shareholders five times since 2000. The latest distribution took place in 2019, with the company offering bonus shares to its shareholders at a ratio of 1:3.
6. GAIL (India)
GAIL has granted bonus shares on five occasions from 2008 to 2022. The most recent issuance of bonus shares by the company was in September 2022, with a ratio of 1:2 for its shareholders.
7. Hindustan Petroleum Corporation
Hindustan Petroleum Corporation has granted bonus shares to its stakeholders on five occasions since 1994. The initial bonus shares were announced on 30-06-1994 in a ratio of 2:1, while the most recent shares were declared on 09-05-2024 in a ratio of 1:2.
8. BPCL
Bharat Petroleum Corporation Limited (BPCL), is a leading Indian oil company. Since 2000, the company has issued bonus shares to its shareholders four times, establishing itself as a reliable source of bonus stocks in India. The most recent bonus share allocation was in 2024 at a ratio of 1:1.
9. Oil and Natural Gas Corporation
The company ONGC has granted bonus shares to its stakeholders three times since 2006. The most recent bonus shares were announced in 2016 at a ratio of 1:2.
10. Indian Oil Corporation
The company has granted bonus shares to its shareholders on seven occasions since 1994. The most recent bonus share issuance was announced in 2022 at a ratio of 1:2.
11. Samvardhana Motherson
Samvardhana Motherson stands out as one of the highest bonus-paying stocks in India. Since 1997, the company has given its shareholders bonus shares 10 times, with the most recent distribution occurring in 2022 at a ratio of 1:2.
12. Dabur India
The company has issued bonus shares on four occasions between 1993 and 2010. Dabur India’s most recent bonus announcement was in 2010, featuring a 1:1 ratio.
Key points to consider
- Financial Stability: Look for companies with healthy reserves and that maintain good levels of profitability.
- Past Patterns: Companies with a good track record of issuing bonus shares will most probably continue doing the same in the future as well.
- Growth Potential: New companies that are currently expanding tend to issue bonus shares as a part of their strategy to grow.
Frequently Asked Questions
Companies distribute bonus shares to give incentives to their shareholders, increase liquidity, and manage the share count in accordance with the company’s earnings and reserves. Issuing bonus shares also indicates that the company is financially stable and will be profitable in the future.
When a company issues bonus shares it usually leads to a decrease in the share price in order to make up for the increased number of shares. For example, with a 1:1 bonus (1 bonus share for each share held), the share price may decrease by half, while the total investment value remains constant.
No, bonus shares do not impact the investment value in any way and it remains constant even after the bonus shares are distributed. Based on the bonus ratio, the share price is altered by the market which results in a decrease in the price per share as you receive additional shares.
Dividends are cash distributions given to shareholders whereas bonus shares are extra shares that the shareholders receive. Both are ways by which companies acknowledge and thank their shareholders, where dividends offer instant income while bonus shares increase the shareholder’s share count.
In many countries including India, bonus shares are typically not subject to taxation upon receipt. Although, if you decide to sell the bonus shares, you may be liable for capital gains tax, depending on the selling price and the initial cost.
The best way to know this is by examining the company’s financial reports and analyzing its track record. Businesses with steady profits and a good record of shareholder rewards are more likely to issue bonus shares