What is Bonus Ratio? How to Calculate Bonus Share Entitlement
Bonus ratio determines how many free shares you receive per share held.
Bonus ratio is expressed as X:Y, meaning X new shares for every Y shares held. A 1:2 ratio means 1 new share for every 2 held. A 3:1 ratio means 3 new shares for every 1 held. The ratio determines how many additional shares each shareholder receives.
If you hold 500 shares and the bonus ratio is 1:1, you get 500 additional shares (total 1,000). For 2:1, you get 1,000 additional shares (total 1,500). For 1:2, you get 250 additional shares (total 750).
New Shares = Existing Shares x (Bonus Numerator / Bonus Denominator)
If you hold 300 shares and bonus ratio is 1:3: New shares = 300 x (1/3) = 100 additional shares. Total = 400 shares.
What are common bonus ratios in India?
1:1 (most common, doubles shares). 1:2 (50% increase). 2:1 (triples shares, less common). 3:1 (rare, very generous). Indian IT and FMCG companies frequently issue 1:1 bonuses.
How does bonus ratio affect stock price?
Stock price adjusts proportionally. For 1:1, price roughly halves. For 1:2, price reduces by about one-third. The total market value remains unchanged on the adjustment day.
Calculate your bonus entitlement for any stock on Stockk Equity with corporate action tracking. Open a free demat account to receive bonus shares automatically.
Investments in securities market are subject to market risks. This article is for educational purposes only and does not constitute investment advice. INDIRA SECURITIES PRIVATE LIMITED : SEBI REG. NO.: INZ000188930, NSE TMID: 12866, BSE TMID: 663, CDSL DPID: 17000, MCX TM ID: 56470, NCDEX TM ID: 01277, CDSL REG.NO.: IN-DP-90-2015, CIN:U67120MP1996PTC085111, RA SEBI REG. No.: INH000023269, IA SEBI REG No.: INA000021410. For any complaints pertaining to securities broking please write to [email protected], for DP related to [email protected].
Frequently Asked Questions
Does bonus ratio indicate company quality?
Generous bonuses suggest accumulated reserves and management confidence. But bonus alone does not make a good investment. Check underlying fundamentals.
What if I hold fractional entitlement?
Some companies pay cash for fractional shares. Others round down. Check the specific bonus terms. Use StockkAsk at stockk.trade/stockkask for corporate action details.
Can a company issue bonus and dividend together?
Yes. Companies sometimes announce both in the same quarter. The dividend applies to shares held before bonus.
How does bonus affect EPS?
EPS decreases because net profit is divided by more shares. Historical EPS is also adjusted for comparison. This is purely mathematical, not a change in profitability.
When are bonus shares credited?
Typically within 15 days of the record date. They appear in your demat account automatically.
Investments in securities market are subject to market risks. This article is for educational purposes only and does not constitute investment advice.
INDIRA SECURITIES PRIVATE LIMITED : SEBI REG. NO.: INZ000188930, NSE TMID: 12866, BSE TMID: 663, CDSL DPID: 17000, MCX TM ID: 56470, NCDEX TM ID: 01277, CDSL REG.NO.: IN-DP-90-2015, CIN:U67120MP1996PTC085111, RA SEBI REG. No.: INH000023269, IA SEBI REG No.: INA000021410
