Understanding Wipro Limited’s Bonus Issue Announcement:-
What are Bonus Shares? Recently Wipo Limited has announced its bonus issue for 2024 and with this example we will try to understand the bonus shares. Bonus shares of Wipo Limited are coming now, so should the shares of Wipo Limited be cheap Bonus shares are this additional number of shares.
These are the shares which the company issues to its existing shareholders. This company rewards those shareholders who are already holding the shares of the company and issues these bonus shares to its shareholders. Now what is the meaning of bonus shares? The number of shares increases. Suppose a company issues bonus shares in the ratio 1:1 like Vipo has done recently, so now the share price of Wipro is ₹ 5000.
How Do Bonus Shares Affect Stock Price?:-
Shares are already available in Wipo Limited, so what will happen in the future? 100 shares of Wipo Limited will be added to you as a bonus at zero cost and the stock price will fall from Rs 500 to Rs 250, that is, it will be divided by buy. What is inside bonus shares? In bonus shares, the company issues free shares to its shareholders and assisting shareholders at zero cost.
Impact of Bonus Shares on a Company’s Balance Sheet:-
What effect does it have on the balance sheet of the company because the company cannot give bonus shares out of thin air just like that I have given you bonus today? What happens in the case of bonus shares? It is the equity share capital of the company, it gets increased at a proportionate rate. That is, the number of rupees worth of bonus shares that the company allots to its assisting shareholders is added to the equity share capital of the company and it is calculated on the basis of the face value of the company.
But and not on the current market price of the company and where does this money come from, if this money comes from the company’s retained earnings i.e. reserves and surplus or if this money comes from the current year’s profit of the company, then what does it mean? That is, Bonus Share is simply an alternative for the dividends of shares.
Why Do Companies Issue Bonus Shares Instead of Dividends?:-
What happens in dividend? The company takes out a part of its profits and gives it to its shareholders in the form of cash, i.e. the company. The cash is withdrawn from the balance sheet of the company and goes into the accounts of the shareholders. So instead of not giving cash, what the company does is that it directly issues bonus shares to its shareholders and transfers the money to the equity share capital.
So what happens is that the company’s money remains with the company and the shareholders get bonus shares. On the flip side, if the company had given money to its shareholders as a dividend, then what would have happened that the company gets a dividend? If distribution tax has to be paid then what does the company do here? It makes a smart move to save tax and issues bonus shares.
Wipro Limited’s Recent Bonus Share Announcement:-
So if there is no transaction of money then what is the need to pay tax to the government and so on. Due to smart move the company saves a lot of money in the form of taxes so now Wipo Limited has recently announced its bonus shares in the ratio of 1:1. The issue is going to be made to its supporting shareholders and they have kept its record date as 3rd of December.
What does this mean? If you have shares of Wipo Limited in your deet account on 3rd of December or before that, then you will get the shares in 1:1 ratio. You will get bonus shares. If you have 100 shares then you will get 100 shares for free of Wipo Limited and similarly the stock price of the company will be adjusted.
Should You Invest in Wipro Limited Now?:-
Is it time to invest in Wipo Limited now? You can definitely get bonus shares from this issue. You can definitely get bonus shares if you invest before December but will you benefit in the short term by participating in this bonus issue? Then the answer is no. In the short term it is not so that your Money will double overnight but the benefit of bonus shares is beneficial only when you stay inside a stock in long term.
I am not telling you here that you should invest in Wipo and invest in it for long term. But what generally happens is that companies issue bonus shares. What does it mean that the company is making profit and hence to distribute its profit with its shareholders, it issues bonus shares? And in the period Long term shareholders get good benefits from it in the form of long term.
Bonus Shares and Increased Liquidity:-
If you understand that the company had given you cash in dividend, then how much return can you generate on that cash? You will get returns at 7, 8, 15 or 20 but the company says that if I have money then I can earn more returns than 20 or even more than 30 and that is why I am keeping the money with myself and will give you returns.
I am allotting shares of the same amount with the help of which whenever your money grows, you will definitely get its benefit, so the simple concept of bonus shares is that bonus shares or There is an alternative for the dividends which the company uses and with this smart move, the company also saves a lot of taxes. If I tell you, there has been a buying of promoters in Wipo Limited for the last few months, although it is a mini buying, that is why.
This buying has not come to your notice much or you have not seen this buying in percentage terms but the promoters of the company were also buying the shares of Wipo and later on they too got involved in this buying. You will definitely get the benefit of bonus shares. Another advantage of bonus shares is that the liquidity of the company’s stock price increases a lot.
The Long-Term Benefits of Bonus Shares:-
Now just see for yourself, if the stock price becomes ₹ 50000, then there will be many such share holders who will buy ₹5 You can buy shares for Rs 5,000,000 and invest in this company, so the thing in India is that Indians are fans of the low stock price, the cheaper the stocks are. They like it more, it seems more attractive to them and whenever the price of a stock comes down, people pounce on that stock, so if the stock of VIP is available for ₹ 5000000, then definitely many people will invest in it.
Conclusion: Should You Invest in Wipro Limited’s Bonus Shares?:-
Would like and what will happen because of this is that the liquidity of the stock will increase in the market and the transaction of stock will become much easier. So friends, this was a short and simple about the bonus shares.
The stock price of BAC has increased 20 times in just one or two years. If you had invested money in its IPO, then your There are many such stories of money becoming 20 times more. If you understand then you can catch multibagger stocks yourself.
