Patanjali Foods shares adjust to 2:1 bonus issue: Here's why you should ignore the 67% plunge

Patanjali Foods share price

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26 Aug, 2025 12:21

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The shares of Patanjali Foods appeared to have fallen nearly 67 percent in one single session on September 11, as the stock price adjusted to a bonus issue of shares. The stock was actually trading in the red with marginal losses at Rs 596 apiece.

Patanjali Foods' board of directors during a meeting in July had approved the issue of bonus shares in the ratio of 2:1. The record date to determine the eligibility of the shareholders set to receive the bonus equity shares was set on September 11.

A company announces bonus issue of shares to reward its existing shareholders with an investment opportunity, which is perceived to be attractive. While the issue of bonus shares increases the total number of shares issued and owned, it does not change the market capitalization of the company. This increases the overall liquidity of the stock, and makes it more affordable for other investors to add to their portfolio, creating strong upside potential for the stock.

As a result, Patanjali Foods shares appeared to have crashed 67 percent in one session, while in reality, they simply adjusted to the bonus issue. After the issuance of bonus shares, the company's market capitalization stands at around Rs 64,856 crore and the stock's P/E ratio nears 18.

The issuance of bonus shares will likely increase investors' confidence for the stock, as it reflects on the firm's strong financials and growth potential. Bonus issue essentially are free shares offered by a company from its reserves. Investors must own shares of the company as on the record date to be eligible for the bonus issue.

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