Indian Oil Corporation (IOC) goes ex-bonus in the ratio 1:1 on 15 March 2018. Here's how it impacts your equity holdings and F&O positions


#1

Indian Oil Corporation (IOC) goes ex-bonus in the ratio 1:1 on 15 Mar 2018. Here’s how it impacts your equity holdings and F&O positions

Indian Oil Corporation Limited goes ex-bonus in the ratio 1:1 on 15 March 2018 i.e. 1 bonus share is issued at Rs.0 for every 1 share 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 2((1+1)/2). So if you held IOC shares at an average price of Rs.350, the price of each share on ex-date would become 350/2 = Rs.175. The price of each share gets divided by 2. Each share held in Demat will become 1 share at Rs.175 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.

P&L of holdings:
Until the bonus shares are credited to your Demat, your IOC holdings in Kite/Q will show an artificial drop in P&L. 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.

Effect on F&O positions:

Adjustments for Options Contracts:

  1. Strike Price: The adjusted strike price shall be arrived at by dividing the old strike price by the
    adjustment factor.
  2. Market Lot: The adjusted market lot shall be arrived at by multiplying the old market lot by the
    adjustment factor. The revised market lot would be 3000.

Adjustments for Futures Contracts:

  1. Futures base price: The adjusted futures base price shall be arrived at by dividing the old futures
    price by the adjustment factor.
  2. Market Lot: The adjusted market lot shall be arrived at by multiplying the old market lot by the
    adjustment factor. The revised market lot would be 3000

This is the NSE Circular for F&O Adjustments in IOC.
To know more about corporate actions and its impact on stock prices, do read this Varsity article.


#2

Except Bonus issue at Rs.0, other infos seem to be misguided.
On Ex date, share price will become half. If it closed today by 400, tomorrow it 'll open at around 200. Since this bonus ratio is 1:1, price of each share 'll be divided by 2.
Pl correct the same or pl clarify if I’m wrong.


#3

This is what I have been thinking too, where did @suresh get the 1.1 division formula.


#4

@portfolioplus911 @tamiltrade My bad. :slight_smile:


#5

i entered in ioc like a fool by just seeing the 50% price drop, should have checked twice
:confounded:.