The Hinduja Group’s flagship company, Ashok Leyland, one of India’s leading commercial vehicle manufacturers, will reconsider a bonus share issue for the first time since 2011. The board meeting scheduled for May 23, which will discuss and approve the audited financial results for the quarter and year ending March 31, 2025, will also consider the proposed bonus share issue.
With Ashok Leyland declaring record dividends, this announcement comes hot on the heels of substantial shareholder rewards. The company declared a second interim dividend of ₹4.25 per share for FY25 and raised the total interim dividend to ₹6.25, which translates to a 625% return on the ₹1 face value. The latest dividend will be paid on or before June 14, 2025.
Market Reaction and Stock Performance
With the announcement of the bonus issue, Ashok Leyland shares rose more than 2 per cent, closing at ₹242.8 on the NSE. The company’s market capitalisation is estimated to be around ₹71,000 crores, and as of March 2025, the promoters held 51.52% of the shares.
How does a Bonus Share Issue Affect Investor Holdings?
A bonus share issue opens up more shares to current shareholders at no extra cost and is usually given out in set ratios, like one-for-one. Theoretically, the share price should be readjusted based on the total outstanding shares after bonus issues. For example, if a company trades at ₹240 with a 1:1 bonus share, the post-issuance price would be approximately ₹120 after the split since the total shares double.
Nonetheless, most companies are inclined to issue bonuses due to a perceived solid company performance. While issuing bonuses might change the firm’s equity structure, it signals management’s preservation of its health. Also, this puts the stock in greater demand as the liquidity increases with the share price.
Looking Foward
A reduction in Ashok Leyland’s inherent value as a consequence of market Borus share policies is highly plausible. However, this move is expected to supplement market perception, likely increasing share demand. If the firm continues this trajectory, it will help stabilise the share price over time.
The outcome of the bonus issue will be discussed at the board meeting on May 23. As the meeting approaches, investors and market watchers are eager to see if the bonus issue will indeed be introduced. It would certainly improve Ashok Leyland’s appeal in the market and immensely reward its loyal shareholders.
Read: Optimum Utility’s Shares of NHPC Show Growth Despite Volatile Markets
