Can this smallcap stock improve fortunes with stock split and bonus shares?

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Subscribe to enjoy similar stories. Corporate action usually brings some good news for investors, particularly in the case of amalgamation and mergers. In many cases, corporate actions do not involve any potential future benefits to the company, as with bonus issues and stock splits.

However, the market still reacts positively to the announcement of bonus shares and stock splits. Bonus shares and stock splits are the commonly discussed corporate actions, frequently making headlines as companies use them to increase the number of their traded shares. When a company issues bonus shares or conducts a stock split, shareholders enjoy an increase in their share count without additional cost.

However, this doesn't significantly alter their overall wealth, as a corresponding drop in share price post-bonus or post-split balances the rise in share numbers. Today's article will delve into stationery products maker Linc's bonus and stock split. On 29 October 2024, the company approved a stock split in a 1:2 ratio.

This means each share with a face value of ₹10 will be split into two shares with face value of ₹5 each, fully paid up. Post-split, the company will have 29 million fully paid-up shares, resulting in a share capital of ₹140 crore. The company has issued a single class of equity shares.

Additionally, the board approved the issuance of bonus shares in a 1:1 ratio, where one new fully paid-up equity share of ₹5 each will be issued for every existing fully paid-up equity share of ₹5 each. The bonus shares will be issued by capitalizing ₹140 million from the securities premium account. Following the bonus issue, the total number of shares will increase to 5.9 crore, with a share capital of ₹297 million.