Stock Bonus Calculator

A bonus issue is when a company gives additional free shares to existing shareholders from its reserves. The bonus ratio (e.g., 1:1 means 1 bonus share for every 1 share held) determines how many new shares you receive. This calculator takes your current shares, bonus shares offered, and shares required (the ratio components) to compute total shares after the bonus issue.

Bonus ratio expresses the bonus as a proportion. A 1:2 ratio means 1 bonus share for every 2 held (50% bonus). A 1:1 ratio means 1 bonus share for every 1 held (100% bonus). A 3:1 ratio means 3 bonus shares for every 1 held (300% bonus). The percentage is calculated as (Bonus Shares / Existing Shares) x 100. Both express the same thing differently.

No. Like stock splits, bonus issues do not change total investment value immediately. If you held 100 shares at Rs 500 each (Rs 50,000 total) and received a 1:1 bonus, you now have 200 shares. The stock price adjusts to approximately Rs 250, keeping your total value at Rs 50,000. The market price adjusts on the ex-bonus date.

On the ex-bonus date, the stock price is adjusted by dividing by (1 + bonus ratio). For a 1:1 bonus, price adjusts to roughly half. For a 1:2 bonus, price becomes about two-thirds. For example, a Rs 1,000 stock with 1:1 bonus adjusts to approximately Rs 500. Actual trading may differ slightly based on market sentiment and demand.

Receiving bonus shares is not a taxable event. However, when you sell bonus shares, the cost of acquisition is considered zero (nil) for shares received after April 1, 2018, and the holding period starts from the allotment date. For shares received before April 1, 2018, the cost is the fair market value as on January 31, 2018. LTCG/STCG is calculated accordingly.

Your average cost per share decreases after a bonus. For original shares: the cost remains what you paid. For bonus shares: cost is zero (for post-2018 bonuses). Combined average = Total Investment / Total Shares. If you invested Rs 50,000 in 100 shares and received 100 bonus shares (1:1), your average cost becomes Rs 50,000 / 200 = Rs 250 per share.

Common bonus ratios include 1:1 (one bonus share per share held), 1:2 (one for every two), 1:3, 2:1 (two bonus per share held), and 3:1. The most generous bonuses are higher ratios like 5:1 or 10:1, though these are rare. Companies like Infosys, Wipro, HDFC Bank, and TCS have given multiple bonuses historically, rewarding long-term shareholders.

The record date is the cut-off date to determine eligible shareholders. You must hold shares in your demat account on the record date to receive bonus shares. Shares must be bought at least T+1 (trade day plus one settlement day) before the record date. The ex-bonus date is typically one day before the record date when the price adjusts. Bonus shares are credited within 2-3 weeks of the record date.

EPS decreases after a bonus because the same profit is divided among more shares. If EPS was Rs 20 and a 1:1 bonus is issued, the new EPS becomes Rs 10. However, the P/E ratio remains approximately the same since the price also adjusts proportionally. Historical EPS is restated for comparability. Analysts provide post-bonus EPS estimates for valuation purposes.

Yes, companies issue bonus shares from free reserves (accumulated profits), securities premium account, or capital redemption reserve. The Companies Act, 2013 allows bonus issues if the company has sufficient free reserves, no default on debt repayment or statutory dues, has not issued partly paid shares, and if the articles of association permit it. The bonus must be authorized by the board and shareholders.

Bonus shares increase the total number of shares by issuing new shares from reserves (face value remains the same, reserves decrease). Stock splits increase shares by dividing existing shares into smaller units (face value decreases, reserves unchanged). Both increase share count and reduce per-share price. Example: 100 shares of Rs 10 face value at Rs 500 gives 200 shares at Rs 250 with a 1:1 bonus (face value stays Rs 10) vs. 200 shares at Rs 250 with a 1:2 split (face value becomes Rs 5). Use our stock split calculator for split analysis.

Companies typically adjust DPS proportionally after a bonus. If DPS was Rs 10 before a 1:1 bonus, it may become Rs 5 per share, keeping total payout the same. However, companies often use bonus issues as an opportunity to increase total dividends. A company paying Rs 10 DPS pre-bonus might declare Rs 6 post-bonus, effectively increasing total dividend by 20%. Check the dividend announcement carefully.

No application is required. Bonus shares are automatically credited to your demat account if you hold shares on the record date. No payment or paperwork is needed. The depository (NSDL/CDSL) processes the corporate action, and new shares appear in your account. You will see a corporate action notification in your demat account statement confirming the credit.

If the bonus ratio creates fractional shares (e.g., you hold 15 shares with a 1:4 bonus = 3.75 shares), the company typically rounds down and pays cash for the fractional part, or consolidates fractions through a trust that sells them in the market and distributes proceeds. Most companies announce the fractional entitlement policy along with the bonus declaration.

Stock exchanges adjust derivative contracts for bonus issues. Strike prices are divided by the adjustment factor (1 + bonus ratio), lot sizes are multiplied accordingly, and open positions carry forward with adjusted terms. The exchange publishes the exact adjustment factor. For a 1:1 bonus, a Rs 500 strike becomes Rs 250 and lot size doubles. Existing positions do not need to be closed.

Bonus issues are generally considered positive signals. They indicate: (1) The company has substantial accumulated reserves. (2) Management is confident about future earnings to support more shares. (3) The company wants to reward shareholders without cash outflow. (4) The stock price may have risen significantly, warranting accessibility improvement. However, fundamentals matter more than corporate actions.

There is no legal limit on bonus frequency, but SEBI guidelines require that a company must not have defaulted on debt or statutory dues, and must have sufficient free reserves. In practice, most companies issue bonuses every few years when reserves accumulate sufficiently. Some growth companies like Infosys and Wipro have issued bonuses multiple times over their listing history.

There is no mandatory minimum ratio. Companies can declare any ratio such as 1:10, 1:5, 1:4, 1:3, 1:2, 1:1, 2:1, etc. Very small ratios like 1:10 (one bonus share per 10 held) are less common as they have minimal impact on shareholders. The most impactful and common ratios are 1:2, 1:1, and 2:1, which meaningfully increase share count and improve liquidity.

Track upcoming bonus issues through: BSE/NSE corporate actions calendar, financial portals like Moneycontrol and Tickertape, broker app notifications, company board meeting announcements (bonus approval requires board resolution), and SEBI filings. Set alerts for companies in your portfolio. Companies first announce board meeting dates, then the bonus decision, followed by record date announcement.

The additional shares from a bonus issue are credited to your existing demat account without extra charges. Your annual maintenance charge (AMC) for the demat account remains the same regardless of how many shares you hold. There are no transaction charges for receiving bonus shares. The only costs associated are regular demat AMC and transaction charges when you eventually sell.

If you sell all your shares before the record date, you will not receive any bonus shares. If you sell partial holdings, you receive bonuses only for shares held on the record date. Be aware of the T+1 settlement cycle: selling on the last trading day before the ex-date means shares are still in your demat on the record date. Timing requires careful attention to ex-date vs record date.

Yes, once bonus shares are credited to your demat account, they can be traded like any other shares. The credit typically happens within 15-20 days of the record date. Some companies process faster. You cannot sell bonus shares before they are credited. After credit, there are no lock-in restrictions. The shares trade at the prevailing market price, which is already adjusted for the bonus.

If your shares are pledged (for loans or margin), the bonus shares allotted on those shares are also typically pledged automatically. The lender records are updated to reflect the increased share count. The pledge value remains proportionally the same since price adjusts. Contact your lender or broker to confirm the treatment of bonus shares on pledged holdings.

Bonus stripping (Section 94(8) of the Income Tax Act) prevents tax loss harvesting using bonus issues. If you buy shares within 3 months before the record date and sell original shares within 9 months after at a loss, that loss is disallowed. This prevents investors from buying before bonus, selling original shares at a loss (for tax benefit), and keeping the "free" bonus shares.

When companies in a mutual fund portfolio issue bonuses, the fund receives additional shares. Since the stock price adjusts proportionally, the fund NAV is not affected on the ex-date. The additional shares simply replace the value of the original holding. However, improved liquidity post-bonus may benefit the fund when rebalancing or selling large positions.

SEBI requires: (1) Board resolution followed by shareholder approval. (2) Bonus shares must be issued within 15 days of approval. (3) No pending conversion of existing instruments (like FCCBs). (4) No default on existing debt or deposits. (5) Adequate free reserves. (6) Articles of association must permit bonus issues. (7) Listing application must be filed promptly with exchanges.

Once a bonus issue is approved by the board and announced, it cannot be revoked under normal circumstances. SEBI regulations require implementation within 15 days. However, in exceptional cases (like regulatory prohibition or court orders), a bonus may be delayed. Cancellation after shareholder approval would require extraordinary circumstances and could invite regulatory scrutiny.

Bonus issues do not change the percentage of promoter or public holding since all shareholders receive bonus shares proportionally. If promoters held 60% before the bonus, they still hold 60% after. The absolute number of shares increases for everyone equally. This is unlike preferential allotments or rights issues where relative ownership can change.

In India, bonus issue means issuing free shares from reserves, while dividend is a cash payout from profits. Some countries (especially the US) have "stock dividends" which are similar to bonus issues. In the Indian context, bonuses and dividends are distinct: bonuses give shares (no cash outflow, no TDS), while dividends give cash (taxable, TDS applicable, cash outflow for the company).

For bonus shares received after April 1, 2018, the holding period starts from the date of allotment (not the original purchase date of parent shares). Shares held for more than 12 months qualify as long-term for listed equity (more than 24 months for unlisted). Since bonus share cost is zero, the entire sale price minus indexation benefit (for unlisted) or flat Rs 1.25 lakh exemption (for listed LTCG) is the gain.

Companies prefer bonuses when they want to: (1) Conserve cash for reinvestment. (2) Capitalize reserves to reflect a stronger balance sheet. (3) Avoid TDS complications for shareholders. (4) Signal confidence without cash outflow. (5) Improve stock liquidity by increasing outstanding shares. Growth companies typically prefer bonuses while mature, cash-rich companies may prefer dividends.

Pre-IPO bonus shares are included in the promoter and shareholder totals for IPO documentation. The cost is reflected as zero or nominal in the offer document. Post-IPO bonus shares must follow standard SEBI timelines and approvals. Lock-in periods for pre-IPO shareholders apply to all shares including bonuses received during the lock-in period.

The issuing company debits the Reserve account (or Securities Premium) and credits the Share Capital account. For a 1:1 bonus on 10 lakh shares of Rs 10 face value: Debit General Reserve Rs 1 crore, Credit Share Capital Rs 1 crore. The total equity remains the same but composition changes: lower reserves, higher share capital. No cash is involved in the transaction.

Book value per share decreases after a bonus issue because the same net worth is divided among more shares. If book value was Rs 200 with 1 lakh shares (net worth Rs 2 crore) and a 1:1 bonus is given, the new book value is Rs 2 crore / 2 lakh shares = Rs 100. The P/B (Price to Book) ratio also adjusts as both price and book value change proportionally.

Yes, NRIs are entitled to bonus shares on the same basis as resident shareholders. The bonus shares are credited to their NRE or NRO demat account depending on where the original shares were held. There are no additional RBI approvals required for receiving bonus shares. Capital gains on eventual sale are subject to tax treaty provisions and may have different rates than for residents.