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Easy Trip stock’s 40% gain after bonus raises eyebrows; calls for scrutiny, say experts

The steep rise in the share price came about days after a stock split and bonus issue in a lacklustre market.

November 24, 2022 / 12:38 PM IST
Representative Image

Representative Image

Easy Trip Planners shares rose 40 percent after a stock split and 3:1 bonus issue, suggesting that operators may have taken advantage of the absence of tight norms for the issue of bonus shares, market experts said.

Share prices generally tend to settle a tad higher after bonus issues and stock splits, without any change in real value as the low price attracts retail investors.

However, the Easy Trip share price changed dramatically over two trading sessions. The stock closed at Rs 67 on the National Stock Exchange on November 23, gaining almost 40 percent this week alone.

The price surge surprised experts, especially because the market has been cool to second-line shares for a while now. Easy Trip Planners shares had been moved in a narrow range since April.

Traders attributed the rise in the share price to the lack of floating stock since the additional shares from the stock split and bonus issue are yet to be credited to the accounts of shareholders. It is convenient for operators to corner shares and drive up the price until the additional shares enter the system, they said.

Usually, when companies announce a bonus share issue, the share price spikes in the run-up to the record date and then stabilises. In the case of Easy Trip Planners, the stock price was largely unchanged when the board announced the ratio of the bonus shares and the stock split on October 11.

The share price moved within a range for over a month till a day before the record date of November 22, when it spiked. On average, about 85 million Easy Trip shares traded daily in the past three sessions, almost thrice the daily average last week.

Since the stock price is now one-eighth of what it was on November 18, (Rs 382, cum-bonus/split), most long-term investors would be unwilling to sell unless they are looking to book a capital loss. That makes the sudden surge in both price and volumes intriguing.

The additional shares will be allotted to investors on or before December 8, Easy Trip Planners said in a statement to the stock exchanges.

If the company allots the shares on December 8, that will make it a little over 15 days from the record date.

The regulator stipulates the number of days from the date of the board meeting within which companies must implement the bonus issue, but does not specify when the shares need to be allotted. While bonus shares are usually allotted within 15 days from the record date, it can vary across companies and there have been instances where the shares have been allotted after 15 days.

“The movement in the price or volume of security is due to market and economic conditions and is purely market driven,” Easy Trip said on November 22 in response to the NSE’s query seeking clarification on the movement in the company’s share price.
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first published: Nov 24, 2022 12:38 pm