GODREJCP goes ex-bonus in the ratio 1:2 on September 12, 2018. Here’s how it impacts your equity holdings and F&O positions

As per SEBI guidelines for adjustments to F&O contracts in case of an announcement of corporate actions (Methodology explained here on NSE website) :

Godrej Consumer Products Limited has considered and approved Bonus at the ratio of 1:2 i.e 1 bonus share issued at Rs.0 for every 2 shares held.

The Company has fixed the Record Date as September 14, 2018 for the purpose of Bonus issue.

Symbol - GODREJCP
Bonus Issue Ratio - 1:2
Ex Date - September 12, 2018

Effect on Holdings -

When a bonus is issued, the share price drops, in this case by a factor of 1.5 (Adjustment factor for Bonus issue of A:B is defined as (A+B)/B. In case of GODREJCP, the adjustment factor will be (1+2)/2 = 2, since the bonus issue ratio is 1:2). So, if you held GODREJCP at an average price of 1500, the price of each share after bonus adjustment will be 1000.

You’ll be given 1 share at Rs.0 for every 2 shares held at Rs 1500, thereby maintaining your overall investment value.

Please note that a bonus issue only increases liquidity and not your investment value.

Adjustments for Options Contracts -

Strike Price - The adjusted strike price will be arrived at by dividing the old strike price by the adjustment factor i.e strike price divided by 1.5

Market Lot - The adjusted market lot will be arrived at by multiplying the old market lot by the adjustment factor. The revised market lot will be 1200.

Adjustments for Future contracts -

Futures Base price - The adjusted futures base price shall be arrived at by dividing the old futures price by the adjustment factor.

Market Lot - The adjusted market lot will be arrived at by multiplying the old market lot by the adjustment factor. The revised market lot will be 1200.

Note - The above changes are effective from September 12, 2018. Refer the circular from NSE regarding this for more information. To know more about the impact of corporate actions on stock prices, check this chapter on Varsity.

1 Like

When I can see or allot bonus share in my demat account ?

owner of this portal zeodhra representative must guide since bonus shares are approved for listing and trading from today September 25. this is the advantage i have with my non broker demat account that if i want i can sell today itself wherein with broker owned /associated demat accounts the shareholder (only applicable to small shareholders and i am 100% sure not applicable to hni )must wait till the shares are in trading account .