Bharat Electronics to issue bonus shares

Bharat Electronics Ltd. will issue bonus shares to the current shareholders. The ratio decided by the company is 2:1 and this issue will take place after the Annual General Meeting (AGM) scheduled in August. 

Bharat Electronics Ltd. (BEL) on Wednesday finalized the issue of bonus shares to its existing shareholders. The company decided the ratio of issuing at 2:1 and has capitalized it. This will apply to those shareholders who will have their share in the company before 8 August 2022. After the announcement of these bonus shares the company’s share price increased by 4 percent in the market setting a record high of 52 weeks. 

The company will be capitalizing on nearly ₹487.32 crores through the issue of these bonus shares. For each share, the shareholder will get two equity shares, which is determined by the ratio of 2:1. Yesterday, the company’s share opened for ₹279.10 a piece and was recorded highest at ₹282.80 before closing at ₹279.25. The shares have shown an overall growth of 4 percent. 

What are bonus shares?

Bonus shares are issued by the company to its existing shareholders as a reward. There are many reasons for the issue of bonus shares but the primary reason is to increase market capital. Many times if the company fails to provide dividends to its shareholders it prefers issuing bonus shares. These shares are generally given out of reserves or certain profits of the company. 

These shares are non-taxable for the holders and help them in building long-term investment in the company. They increase the liquidity and also the value of the company is increased in the market. In this case, Bharat Electronics value or the share price has seen a rise after the announcement of issuing bonus shares. 

About Bharat Electronics

Founded in 1954 it is one of the nine Public Sector Undertaking (PSU). It is owned by the government of India and works in manufacturing electronics and defense arms. The company was formerly established to supply electronic products at subsidized rates. Later, the quality of its products was made in the defense sector. Manufacturing high-quality types of equipment, manufacturing small parts for the defense army as well as producing electronic goods. 

Their popular products include weapon locating radar, battlefield surveillance radar, sonars, missiles, simulators, tank electronics, etc. The company is not only an expert in manufacturing arms but also provides excellent software services. The electronics division of the company has contributed to the manufacturing of electronic voting machines and traffic signals in the country. 

The company’s head office is located in Bengaluru, India, and also has working units in Navi Mumbai, Chennai Ghaziabad, Pune, Panchkula, Hyderabad, etc. The company also has foreign operating branches in New York, Singapore, Myanmar, and Vietnam. 

“Now with the government’s focus on Atma Nirbhar Bharat as well as Make in India for defense requirements, I think it’s a huge booster for BEL. Looking at a 12 percent revenue CAGR over the next four years, the other big opportunity for BEL is exports to friendly countries, which they’ve been doing, but I think there’s still a huge opportunity there. So looking at an EPS of about Rs 13 for FY24, which translates into a target price of Rs 390. And I think they’ve just declared two is to one, I think that is another trigger.”, stated the company officials.

Previously the company issued bonus shares in September 2015 at the ratio of 2:1 and in September 2017 for 1:10. Previously, the company had issued bonus shares in September 2015 at the ratio of 2:1 and in September 2017 for 1:10. This decision is a win-win situation for the shareholders as well as the company. The performance of the company over the years has been commendable and with this decision, the company has increased its market share. Further details and issuance of these shares will be declared by the company in their Annual General Meeting (AGM) scheduled for later this month.