KPI Green Energy shares began trading on an ex-bonus basis on Friday, following the company’s 1:2 bonus share issuance, which is a strategy commonly used by companies to reward existing shareholders by issuing additional shares without any cost. The stock experienced a 4.44% drop, falling to Rs 547 on the Bombay Stock Exchange (BSE) by 1:40 pm, after touching an intraday low of Rs 548. This decline in the stock price is a normal adjustment that typically happens after a bonus issue.
In a formal filing to the exchange, KPI Green Energy confirmed that the company had set Friday, January 3, 2025, as the ‘Record Date’ to determine the eligibility of shareholders entitled to receive bonus equity shares. The bonus shares will be issued in the proportion of 1 (One) equity share for every 2 (Two) existing equity shares held by eligible investors. This is a crucial piece of information, as only shareholders who hold the stock on the record date will receive the bonus shares.
The drop in the share price, which some trading apps reflected as a 36% decrease, is due to the recalibration of the stock’s price following the bonus issue. The purpose of this price adjustment is to ensure that the company’s overall market capitalization remains unchanged, despite the increase in the number of shares outstanding after the bonus shares are issued. In simple terms, the price correction reflects the increase in the total number of shares, which causes the price per share to adjust lower while keeping the total value of the company the same. This type of price correction is a standard procedure after bonus issues and does not signal any fundamental shift in the company’s performance or financial position.
It is essential to understand the role of the ‘Record Date’ in the bonus issue process. The record date helps to determine which shareholders qualify for the bonus shares. Investors who wish to be eligible must purchase the stock at least one day before the ex-date, as trades settle on a T+1 basis (meaning the transaction is finalized one day after the trade date). Any shares bought on the ex-date will not be eligible for receiving bonus shares, dividends, or any other corporate actions like stock splits.
This marks KPI Green Energy’s third bonus share issuance in recent years. In 2024, the company issued bonus shares in a 1:2 ratio, and in 2023, it issued bonus shares in a 1:1 ratio, as noted by Trendlyne. These consistent bonus share issuances demonstrate the company’s commitment to rewarding shareholders, particularly in times of strong performance.
Despite the current dip in share price following the bonus issue, KPI Green Energy has shown impressive growth over the past year. The company’s shares have surged by an outstanding 80% over the past year, highlighting its strong financial performance and the growing investor confidence in the company. This impressive growth underscores the positive market sentiment surrounding the company, even though the bonus issue has led to a temporary price drop. Investors and analysts will continue to monitor the company's performance closely, especially considering the larger trend in renewable energy, where KPI Green Energy operates.
