Therefore, VST Industries Ltd.’s stock will be closely monitored in the subsequent two trading sessions. The reason? There is the record date for the company’s bonus share issue, an upcoming event on Friday September 6.
This stock has been declared a wonderful bonus issue, and our wagon trader, Radhakishan Damani, supports it.
Understanding the Record Date
The record date is essential for this reason because it defines which shareholders are entitled to participate in the corporate action, be it a dividend, bonus, stock split, or share buyback.
Only those shareholders who possess the stock on the record date, not the shareholders who buy the stock after the record date, benefit from such options and gain such privileges.
Bonus shares: Meaning and importance
Bonus shares are more of a company’s stock issued to the current shareholders at no extra cost since they are issued depending on the number of shares the shareholders already hold.
This method allows firms to pay their shareholders while improving the market for their shares. This can be seen in the case of VST Industries, whereby shareholders were offered 10 bonus shares for every one share, which is considered to be a nice incentive.
Impact on Share Price
The one that directly affects the announcement of bonus shares, which is followed by an increase in share price due to enhanced confidence in the firm in the future.
However, what people do not understand is that this share price may move down after the public offering of bonus shares since it translates to an increase in the number of shares. This adjustment is usually made in the market price depending on the changes in the company’s share from normal to the new number.
Radhakishan Damani’s Stake Sale
Mangalore-based investor Radhakishan Damani, who is among the largest shareholders in VST Industries, sold 2. Control 26% of its market through a block deal, and therefore, one can conclude that they are the major shareholders of the company.
This sale occurred before the quarterly release of the company’s results and the release of the bonus share issue. Such actions of the substantial shareholders affect the market mood and, thus, the particular stock’s performance.
VST Industries’ Financial Performance
VST Industries’ Q1 June Quarter financials depicted a slump in revenues as well as the EBITDA. The company’s revenue went down 3 percent as compared to the previous year in the Schultz case. 5% to ₹321.33 crore, whereas it has its EBITDA disappointed at 30.4% to ₹73. 28 crore.
The EBITDA margin, however, reduced to 47, down to 7 % from 52 %, which was prevalent in the previous year. These figures suggest a difficult period for the company ahead of this result, which may have informed this policy on issuing bonus shares for its shareholders.
Market Reaction
As a result of the bonus share issue earlier, VST Industries has registered a slight increment in its trading value. At the time of writing this paper, the stock is trading at 0.8% higher at ₹4,537.
In the last year, the value of the stock has risen by 28%, which proves the investors’ belief in the company’s future development.
Conclusion
The bonus share issue in the case of VST Industries is in relation to the record date announced for the next month and will prove to be substantial for the shareholders and investors of the company. The move of offering 10 bonus shares for every share owned is a great incentive, which shows that the company has the best interest of its shareholders at heart.
Despite such a recorded albeit some glitches in the recent financial performance, bonus share issue and heavyweights like Radhakishan Damani’s investment point towards bright future outlooks for the company.
It will also be appealing to observe the market reaction and the performance of VST Industries shares in the following few days when the record date draws near. For shareholders, this is the best opportunity to gain from the company’s clear corporate actions and see higher returns on their investment.
To know more, click here.
