Shares of Anand Rathi Wealth surged as much as 8 percent in early trade on January 9 after the company announced plans to consider a proposal for the issue of bonus shares. The company's board will mull over the proposal at its upcoming meet on January 13.
If approved, this will mark the first instance of Anand Rathi issuing bonus shares to its shareholders.
At 10.19 am, shares of Anand Rathi were trading at Rs 3,932.95 on the NSE, sharply off its day's high of Rs 4,139.30. Volumes in the counter also surged as one lakh shares changed hands thus far, already exceeding the one-month daily traded average of 43,000 shares.
A bonus issue is when a company issues additional shares to its existing shareholders free of charge. These shares are distributed in proportion to the shareholders' current holdings. For example, a company might offer one additional share for every five shares a shareholder already owns.
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A bonus issue is typically done by companies to reward shareholders, improve liquidity, or adjust the stock price to a more attractive level without affecting the company's overall capital. The value of the company remains unchanged, but the number of shares in circulation increases, which may impact the stock's market price.
The wealth management company had reported a solid earnings performance in Q2. Its consolidated net profit grew 32 percent on year to Rs 76 crore, up from Rs 57.5 crore in the same period last fiscal. On the other hand, revenue for the quarter rose 32.8 percent to Rs 242.5 crore against Rs 182.6 crore in the year-ago period.
For the last quarter, the company also reported a 70 percent year-on-year spike in mutual fund distribution revenue to Rs 195 crore. Net inflows during this period also recorded strong growth, up 128 percent on year to Rs 5,700 crore.
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