BEL goes ex-bonus in the ratio 1:10 on 28 Sep 2017. How does this affect my equity holdings and F&O positions?
BEL goes ex-bonus in the ratio 1:10 on 28 Sep 2017 i.e. 1 bonus share is issued at Rs.0 for every 10 shares held in the Demat account of all eligible shareholders.
Effect on Holdings:
When a bonus is issued, the share price reduces, in this case by a factor of 1.1. So if you held BHEL shares at an average price of Rs.165, the price of each share on ex-date would become 165/1.1 = Rs.150. The price of each share gets divided by 1.1. Each share held in Demat will become 1 share at Rs.150 and 1 bonus share at Rs.0.
Please note that your investment value does not increase here. Your share price reduces and the remaining investment value is given to you in the form of bonus shares.
Suppose you hold 15 shares of BEL as on ex-date, then you will receive 1 bonus share to your Demat for 10 out of these 15 shares, and the 0.5 bonus share for the remaining 5 shares will be given to you in the form of cash and will be directly credited to your registered bank account by company’s RTA managing the bonus issue.
P&L of holdings:
Until the bonus shares are credited to your Demat, your BEL holdings in Kite/Q will show an artificial drop in P&L of approximately 10%. Once the bonus shares are credited to your Demat, your P&L will be restored to its correct value.
You will receive an SMS from CDSL when your bonus shares are credited to your Demat which could take upto 2 weeks.
Here are the steps on How to add bonus share price in Q backoffice.
Effect on F&O positions:
Option strike prices are divided by the factor of 1.1. A strike price of 195 becomes 177.25, a strike price of 200 becomes 181.80 and so on. F&O lot sizes are multiplied by the factor of 1.1. The old lot size of 4500 will be revised to a new lot size of 4950.
The future and option prices are divided by the factor of 1.1 to maintain the same contract value as of before the bonus issue.
If you’re unable to see the revised market lot size on Kite, please do a hard refresh Ctrl + Shift + R and the new lot size will be updated on Kite.
This is the NSE Circular for F&O Adjustments in BEL.
To know more about corporate actions and its impact on stock prices, do read this Varsity article.