Key Takeaways:
- Bonus shares are provided by companies to shareholders at no extra cost as additional shares.
- Prominent companies such as Wipro and Infosys have issued bonus shares seven times, with favourable ratios.
- Bonus shares benefit both the company and its shareholders.
- They come with tax exemptions and contribute to enhancing the company’s market presence.
What are Bonus Shares in the Stock Market?
Bonus shares are a method used by companies to reward their shareholders and expand their equity base. These shares are issued without any additional cost and are allocated based on the number of shares the shareholder already holds. Bonus shares are essentially a form of dividend, which, once issued, increase the shareholder’s profit potential. They also provide tax advantages, and assist the company in strengthening its reputation in the stock market.
Let’s explore how major players like Infosys and Wipro have distributed bonus shares over the years.
Wipro Bonus Shares History
Wipro, a well-established IT giant, has used bonus shares strategically to boost investor participation. Below is an overview of wipro ltd share history:
- In 1971, Wipro issued its first bonus shares at a 1:3 ratio.
- In 1981 and 1986, a total of six bonus shares were issued with a 1:1 ratio.
- The pattern shifted in 1997 and 2004, with bonus shares offered at an increased 2:1 ratio.
- The year 2005 saw another issuance at the 1:1 ratio.
- Wipro’s most recent bonus shares were issued in 2019, again at a 1:3 ratio.
To better illustrate the impact, consider this example: if you had held three shares of Wipro in 1981, you would now own approximately 20,480 shares based on their historical bonus share distributions.
Note: Bonus shares are issued in a specific ratio based on the shareholder’s existing shares. For instance, a 1:3 ratio means three bonus shares for every one share held, while a 1:2 ratio offers two bonus shares per share held.
Infosys Bonus Shares History
Similar to Wipro, Infosys has a strong track record of issuing bonus shares, having done so seven times since 1997. Here’s a breakdown of Infosys limited share history:
- Infosys issued its first bonus shares in 1994 at a 1:1 ratio, followed by the same ratio in 1997 and 1999.
- In 2004, Infosys surprised shareholders with a 3:1 bonus share ratio.
- Subsequent issuances followed in 2006, 2014, 2015, and 2018, all at a 1:1 ratio.
Benefits of Bonus Shares for Shareholders
Bonus shares offer numerous advantages to shareholders, including:
- Increased profit potential without the need for further investment.
- Tax exemptions on the additional shares received.
- Long-term shareholders benefit significantly from these bonus issuances.
- Enhanced liquidity, providing shareholders with easier opportunities to sell their shares.
Benefits of Bonus Shares for Companies
For companies, bonus shares provide several strategic advantages:
- They boost the company’s visibility in the stock market, attracting high-value investors.
- Bonus shares increase the number of free-floating shares, promoting liquidity.
- It allows companies to reward shareholders without having to distribute cash dividends.
Conclusion
Bonus shares are a vital tool for companies to increase their market value and for shareholders to gain long-term benefits. By fostering a solid relationship between the company and its shareholders, bonus shares create positive momentum in the stock market. Stay informed about upcoming bonus share announcements to make the most of your investment opportunities.