BHEL goes ex-bonus in the ratio 1:2 on 28 Sep 2017. How does this affect my equity holdings and F&O positions?
BHEL goes ex-bonus in the ratio 1:2 on 28 Sep 2017 i.e. 1 bonus share is issued at Rs.0 for every 2 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 1.5. So if you held BHEL shares at an average price of Rs.120, the price of each share on ex-date would become 120/1.5 = Rs.80. The price of each share gets divided by 1.5. Each share held in Demat will become 1 share at Rs.80 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.
Important Note:
Suppose you hold 3 shares of BHEL as on ex-date, then you will receive 1 bonus share to your Demat for 2 out of these 3 shares, and the 0.5 bonus share for the remaining 1 share 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 BHEL holdings in Kite/Q will show an artificial drop in P&L of approximately 66.6%. 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 1.5. A strike price of 135 becomes 90, 140 becomes 93.35 and so on. F&O lot sizes are multiplied by the factor of 1.5. The old lot size of 5000 will be revised to a new lot size of 7500.
The future and option prices are divided by the factor of 1.5 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 BHEL.
To know more about corporate actions and its impact on stock prices, do read this Varsity article.