On Wednesday’s trading session, Gujarat Toolroom’s shares jumped 5% and reached the upper circuit limit after the firm stated it would call a board meeting to explore a possible bonus share issue in the ratio of 5:1.
The board meeting of Gujarat Toolroom is scheduled for Monday, January 6, 2025, according to a filing with the exchange.
“We wish to inform you that a meeting of the Board of Directors of Gujarat Toolroom Limited is scheduled to be held on Monday, January 6, 2025, to consider and approve the proposal for issuance of bonus shares in the ratio of 5:1 (five bonus equity shares for every one equity share) to the eligible equity shareholders of the Company as on the proposed record date by capitalisation of securities premium, subject to the approval of the shareholders of the Company,” the company said in the filing.
This will be the company’s first time issuing bonus shares to shareholders, based on data from the BSE.
In order to enhance their paid-up capital, increase their earnings per share (EPS), and use their free reserves, companies issue bonus shares while simultaneously decreasing their reserves. These shares, also known as free shares, are given to stockholders at no additional expense.
Bonus shares will only be available to investors who buy the stock before the ex-date. Bonus shares will not be awarded to buyers on or after the ex-date.
The bonus issue’s record date is still pending.
Stock splits and QIPs
Gujarat Toolroom has divided its shares from ₹10 to ₹1 the year before.
In order to increase the number of outstanding shares and improve trading liquidity, a firm would usually split its stock, making it more accessible to shareholders.
Through a Qualified Institutional Placement (QIP) in October, Gujarat Toolroom was able to raise ₹50 crore at an issue price of ₹11.50 per share. Institutional investors including Zeta Global Funds and Eminence Global Fund PCC Trade Fund participated in the sale in significant numbers.
At ₹17.22, Gujarat Toolroom’s shares are up 5% at the moment.
According to BSE data, Gujarat Toolroom’s stock has increased by about 12.5% in the last month and by over 28% in the previous three months. The stock has soared by more than 1200 per cent in the last three years, despite the fact that it has had negative returns in the last year.
