Ashok Leyland shares adjust to bonus issue: Here's why you should ignore the 50% plunge

Ashok Leyland bonus issue

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Ashok Leyland's share price appeared to have nearly halved in value on July 16. The shares of the automaker dropped 50 percent in one single day, not due to a significant market crash, but as a result of its 1:1 bonus issue which took effect today.

The shares are trading ex-bonus, and have adjusted their stock price accordingly. While the share price has halved, it will not bear an impact on shareholders' holdings. For example, if an investor held one share of Ashok Leyland worth Rs 100 as on the record date (July 16), he will now have two shares of the company worth Rs 50 each. This keeps the total worth of his holdings same at Rs 100.

The shares of the company opened at Rs 125 apiece on NSE, marking a fall of over 50 percent from the previous closing price of Rs 251 apiece.

While announcing its results for the fourth quarter of FY25 in May, Ashok Leyland had said that its board approved the issue of bonus shares in the ratio of 1:1. Later in another exchange filing, the company announced that July 16 has been set as the record date to determine the eligibility of the shareholders set to receive the payment.

The bonus shares will be allotted to the eligible shareholders on July 17, and investors can trade these shares from July 18. Notably, this was the first bonus issue announced by the company in 14 years since a 1:1 bonus issue in 2011.

Ashok Leyland shares dropped nearly 1 percent in trade to hover around Rs 124 apiece on July 16. The stock currently has a P/E ratio of nearly 44.

In May, the company reported a 38.4 percent rise in net profit at Rs 1,246 crore in the fourth quarter of FY25, on the back of decent revenue growth and robust sales. The company had posted a profit of Rs 900 crore in the fourth quarter of FY24. Its revenue from operations rose 5.7 percent to Rs 11,906.7 crore during the quarter.

Also read: Our LIVE blog on stock market updates