News

This week is packed with exciting corporate actions for several companies, including Indo US Bio-Tech, Wipro, and others. These actions involve dividends and bonus shares, which can impact your investment decisions. 

Wipro, Diamond Power Infrastructure, Gujarat Natural Resources, Indo US Bio-Tech, and Moongipa Capital Finance will be in the spotlight as they approach their ex-date on December 3, 2024. These stocks are responding to significant corporate actions such as dividends, bonus issues, rights issues, and stock splits.

Key Dates for Wipro, Diamond Power Corporate Actions

Here’s a breakdown of the companies going ex-date this week and what it means for their shareholders December 2nd to 8th, 2024)

Important Points to Remember

• The dividend or bonus will be credited/issued to your Demat account after the ex-date, typically within a few weeks.
• The ex-date can affect the stock price. Often, the stock price dips slightly on the ex-date to reflect that new buyers won’t receive the dividend or bonus. This is a normal market adjustment.  
• Check with your broker or refer to company announcements for specific details.   

Let’s break down what’s happening and what it means for you.  

Understanding Ex-Date

Before we delve into the details, it’s crucial to understand the term “ex-date.” In the stock market, the ex-date refers to the first day a stock trades without entitlement to a specific corporate action. These actions include dividends, bonus shares, rights issues, stock splits, or buybacks.  

To be eligible for these benefits, you must be a shareholder on the record date, typically set a few days before the ex-date. Companies use the record date to determine the list of shareholders entitled to receive the benefits.

Understanding Dividends and Bonus Shares

Now, let’s explore the two main types of corporate actions happening this week: dividends and bonus shares.

• Dividends: A dividend is a payout of a company’s profits to its shareholders. It’s a way for companies to share their success with investors. The company’s board of directors determines the dividend per share. In this case, Indo US Bio-Tech is offering an interim dividend of ₹0.25 per share.
• Bonus Shares: A bonus issue is when a company issues additional shares to its existing shareholders for free.  This increases the total number of shares outstanding without affecting the company’s overall value. In simpler terms, if you hold 100 company shares before the bonus issue, you might receive an additional 20 (depending on the bonus ratio) after the ex-date. This week, Wipro (ex-date yet to be announced) has declared a bonus issue in the ratio of 1:1, meaning shareholders will receive one bonus share for every share they hold.
• Stock Split: While not happening this week, for companies undergoing a stock split (like Diamond Power Infrastructure), the ex-date marks the day the stock starts trading with the new face value. However, the total value of your holdings remains the same.

What Does This Mean for You?

If you’re holding Indo US Bio-Tech or Wipro shares before December 3rd, you’ll be eligible for the respective benefits. This can be seen as a positive for investors, as it represents a return on their investment (dividend) or an increase in their shareholding (bonus).

However, suppose you’re considering buying shares in these companies specifically for the dividend or bonus. In that case, it’s important to remember that you won’t be eligible if you purchase them on or after December 3rd. You might be better off looking at other investment opportunities.

Beyond This Week

Ex-dates are a regular occurrence in the stock market. Companies use dividends and bonus shares as ways to reward their shareholders. Staying informed about upcoming ex-dates can help you make informed investment decisions.  

Here are some tips for keeping track of ex-dates:

• Many online financial websites and brokerage platforms provide calendars highlighting upcoming ex-dates.  
• You can also sign up for email alerts from your brokerage firm to receive notifications about ex-dates for your stocks.
• It’s a good practice to regularly review company announcements and financial reports to stay updated on upcoming corporate actions.

By understanding ex-dates and how they affect your investments, you can be better prepared to navigate the stock market and potentially maximize your returns.

Things to Consider Before Investing for Dividends and Bonus Shares

While dividends and bonus shares can be attractive, here are some things to keep in mind:

• Company Performance: A company’s ability to pay dividends depends on its financial health. Look for companies with a history of paying dividends and consistent profitability.
• Tax Implications: Dividends and bonus shares might have tax implications. Research the tax treatment before investing.
• Overall Investment Strategy: Don’t chase dividends or bonus shares alone. Consider these benefits as part of your overall investment strategy and focus on the company’s long-term prospects.

Conclusion

Dividends and bonus shares can be great ways for companies to reward their loyal investors. By understanding these concepts and the expiration date, you can make informed investment decisions and potentially benefit from these additional rewards. Remember, always conduct your research and choose companies that align with your financial goals before investing.

FAQs

November jitters left this EV stock grappling to hold its market share. Ola Electric Mobility Limited shares opened the week with a 5.5% dip in early trading. The stock has been on a downward trajectory for three months, but November brought a mix of highs and lows, eventually closing at Rs.87.41 on the last trading day. Despite this, the sharp plunge on Monday morning has raised the big question: What went wrong? Let’s dive in to uncover the reasons.

Ola Electric Mobility Share Price Trend

Since its inception in August 2024, the company’s share price has seen a series of highs and lows, but the overall trend is downward. Ola Electric was listed at a 66% increase from the issue price of Rs.76. However, the following months saw a drop in the share price to levels below the issue price.

The market competition from peers like Bajaj Auto and TVS Motors fueled the struggle to stay on top, especially before the festive rush. 

Four reasons attributable to this fall can be

Lower Quarterly Revenue

The company delivered 98,619 units during the quarter, marking a 73.6% YoY growth. It also recorded quarterly revenue of Rs.1,240 crore in the second quarter of FY25, up 38.5% from Rs.896 crore in the quarter ending September 2023. However, a decline in sales and revenue becomes apparent compared to the June 2024 quarter. 

Fading Festive Peak in Sales:

The company’s sales sharply declined in November, dropping by 33% to 27,746 units. Registrations fell by 18% in November, which is higher than the rate of decrease of its competitors TVS Motors (13.4%) and Bajaj (12%). The reasons for this decline are attributed to the fading festive demand. 

The company’s deliveries peaked in the first quarter of FY2025 (at 1,25,198) due to Ola Electric’s price cuts and the resulting increase in demand for its mass-market scooter. The numbers declined in the second quarter to reach 98,619 deliveries. 

String Of Losses:

Ola Electric has long experienced a series of losses in its profit margin. The chain of net losses remained unchanged for the FY2024 quarters as well. In the second quarter of FY2025, the company reported a negative PAT of Rs.495 crore, more than the loss of Rs.347 crore in the first quarter (June 2024).

Strong Competition

Ola’s market share in CY2024 has seen significant fluctuations, reaching a high of 49.8% in May, dropping to 28.6% in September, and recovering to 31% in October, driven by festive discounts.

Though the sales have fallen, the company remains the segment leader with a market share of 25.09%, higher by a narrow margin from its peers. However, November’s sharp decline underscores intensifying competition from TVS and Bajaj, hinting at a tighter battle for market dominance in 2025.

Road Ahead For Ola Electric:

After a sharp 5.5% dip in early trading on Monday morning, the stock rebounded strongly, climbing nearly 6% by the end of the first half of the trading session. This happened after the company CEO, Bhavish Aggarwal, announced the company’s retail expansion plan on various platforms. The company also plans to increase its store count to 4000 by the end of December 2024. 

The company also plans to broaden its product portfolio by adding 20 new products in the next two years, keeping a frequency of one launch per quarter. Under its Network Partner Program, it plans to expand its network of partners to 10,000+ to amplify its D2C network. Additionally, the company is also ready to enter cell production by FY2026. 

Source: Company Report and ET

What’s in it for Investors?

Ola Electric’s recent stock performance reflects positive and negative factors. While the company has shown growth, recent challenges such as declining sales, increasing competition, and ongoing losses have raised investor concerns.

Key takeaways for the company include-

• Strong Growth Potential: Ola Electric’s focus on electric mobility and its strong brand presence offer growth potential.
• Intensifying Competition: The increasing competition from established players like Bajaj Auto and TVS Motors could impact market share and profitability.
• Financial Performance: The company’s consistent losses and declining sales are major investor concerns.
• Future Plans: The company’s expansion plans, including product launches, retail expansion, and cell production, could drive future growth.

So, if you plan on investing in Ola Electric Mobility Limited, carefully evaluate Ola Electric’s ability to execute its growth plans amidst intense competition, improve profitability, and adapt to evolving market dynamics and regulatory changes. The company’s success hinges on its ability to maintain market leadership, address financial challenges, and capitalize on emerging trends in the EV industry.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

Following significant market developments, Easy Trip Planners Limited recently saw its shares surge 14% as they traded ex-date for a 1:1 bonus share issue.

This move has attracted attention from investors and market watchers, raising questions about the potential of this travel-focused stock. Let’s break down what happened, why it matters, and whether this is a stock you might consider holding.

What Triggered the Rally?

The recent surge in Easy Trip shares comes as the stock started trading ex-bonus. An ex-date marks the cut-off for eligibility to receive bonus shares—shares issued to existing shareholders at no additional cost. In this case, Easy Trip announced a 1:1 bonus ratio, meaning shareholders will receive one additional share for every share they hold. This corporate action often boosts market confidence, reflecting the company’s financial health and shareholder-friendly approach.

Bonus Shares Funded by Reserves

Easy Trip announced that the bonus shares will be issued using the company’s available reserves as of March 31, 2024. A total of 1,77,20,40,618 shares, each with a face value of ₹1, will be distributed. This issuance will utilize ₹1,772.04 million from the company’s reserves, leaving the reserves at ₹3,973.96 million.

Post-distribution, Easy Trip’s total share capital will rise to ₹3,544.08 million, reflecting its growth and commitment to enhancing shareholder value. This move underscores the company’s confidence in its financial stability and dedication to rewarding investors. Source: Mint

Why Issue Bonus Shares?

Bonus shares are often distributed to reward existing shareholders and improve liquidity. The market price adjusts accordingly by doubling the number of outstanding shares, making the stock more affordable to smaller investors. Easy Trip’s decision aligns with its strategy to attract a broader investor base while showcasing its robust financials.

Since its IPO in 2021, Easy Trip shares have been a standout performer, delivering significant returns to investors. The company’s continued growth and shareholder-focused policies, including regular bonus issues, have positioned it as a compelling pick in the travel services sector.

A Closer Look at Easy Trip’s Performance

With India’s travel industry rebounding strongly post-pandemic, Easy Trip has benefitted from increased demand for travel services and online booking platforms.

The company’s financials remain solid, supported by its asset-light business model and consistent profitability. Strategic partnerships and the expansion of its service offerings have further boosted this performance.

The gross booking revenue (GBR) for the quarter also stood at ₹20,756 million. GBR from hotel nights surged to ₹2,414 million, reflecting an impressive year-on-year growth of 178.4%, while revenue from other bookings increased by 19.4% to ₹407 million. Source: Mint

What should investors do?

Here are key factors to consider before deciding:

Growth Potential

The Indian travel industry is set to expand rapidly, driven by rising disposable incomes and increasing internet penetration. Easy Trip’s focus on online travel services positions it well to capitalize on this growth.

Valuation

Post-bonus, the adjusted share price often presents a more accessible entry point for retail investors. However, the stock’s rally may have already priced in some of the benefits of the bonus issue. Assessing its valuation compared to peers will help determine if it’s still a good buy.

Risks:

Despite its strong fundamentals, the travel industry is cyclical and sensitive to macroeconomic factors like inflation and geopolitical instability. Investors should be prepared for potential volatility.

Long-Term Perspective

If you believe in the long-term growth of India’s travel sector and Easy Trip’s leadership, this stock could be a worthy addition to your portfolio.

How to Benefit from Bonus Shares

If you’re an Easy Trip shareholder, the bonus shares will be credited to your demat account shortly after the record date. Monitoring the adjusted share price to assess its impact on your portfolio is essential. Remember, while bonus shares increase the number of shares you own, the overall value of your investment remains the same initially as the market adjusts the stock price proportionally.

Conclusion

The bonus issue and recent rally underline Easy Trip’s appeal to investors, but deciding to buy or hold the stock requires careful consideration. For current shareholders, the 1:1 bonus is a win-win. For prospective investors, analyzing the stock’s fundamentals, sector dynamics, and valuation is crucial before taking deciding.

As always, align your investment decisions with your financial goals and risk tolerance. A diversified approach will help mitigate potential downsides.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

FAQ

The Indian stock market witnessed a sharp plunge on Thursday, November 28, as global and domestic concerns gripped investors. The Nifty 50 fell by 361 points, slipping below the crucial 24,000 mark to close at 23,914, while the Sensex nosedived by 1,200 points, settling at 79,043.

Amid a tumultuous session, the broader indices, including the Nifty Midcap 100 and Smallcap 100, managed to hold steady, ending flat despite the sell-off in blue-chip stocks.

What led to this market turmoil?

Let’s break it down step by step.

1. Geopolitical Tensions in the Middle East and Europe

Escalating conflicts in the Middle East and Eastern Europe rattled investor confidence. The ongoing Israel-Hezbollah conflict intensified after Israel launched airstrikes on Hezbollah positions in southern Lebanon. Simultaneously, the Russia-Ukraine war showed signs of further escalation. These developments triggered uncertainty, leading investors to offload riskier assets like equities.

2. Weak Global Cues

A US stock market holiday left global markets without clear directional cues, dampening momentum in Indian equities. In the absence of external triggers, profit booking dominated the session. Historically, such periods of low global activity often lead to heightened domestic market volatility.

3. Pressure from Heavyweight Stocks

Significant losses in major stocks like Infosys, Reliance Industries, and HDFC Bank dragged indices lower. IT, consumer durables, and automotive sectors faced considerable selling pressure. The Nifty IT index dropped 2.3%, driven by declines in LTTS, Infosys, and HCL Tech. Source: Livemint

4. Foreign and Domestic Investor Activity

Foreign Institutional Investors (FIIs) exhibited a mixed bag of activity. After weeks of persistent selling, they made a notable comeback, purchasing stocks worth Rs 11,100 crore over three consecutive trading sessions. This marked a significant turnaround from the 38 straight sessions of net outflows.

However, the buying momentum quickly faded, with FII purchases slowing down to just Rs 7.78 crore on the third day. This suggests that the recent buying spree may be short-lived, and further selling pressure could emerge in the coming sessions.

Despite this brief uptick, FPIs remain net sellers in November, offloading equities worth Rs 15,845 crore. This follows a similar trend in October when FPIs sold shares worth Rs 94,017 crore. Year-to-date, FPIs have been net sellers, with total outflows of Rs 9,252 crore.

Domestic Institutional Investors (DIIs) adopted a cautious approach. They were on the sidelines, awaiting clarity on upcoming policy decisions and the Union Budget 2024. DIIs will likely adopt a wait-and-watch strategy until the government’s stance on key economic issues becomes clearer. Source: Economic Times

5. Strengthening US Dollar

A robust US dollar added to the market’s woes. Rising dollar rates prompted investors to pivot from equities and commodities to bonds and forex markets. This shift reduced liquidity in the equity markets, contributing to the sell-off.

6. Uncertainty Around US Fed Policy

Uncertainty regarding the Federal Reserve’s rate trajectory further unnerved markets. Although a December rate cut seemed likely, internal disagreements within the Federal Open Market Committee heightened speculation, impacting global and domestic markets alike

7. Monthly Derivatives Expiry

Thursday also marked the expiry of monthly derivatives contracts, which often amplifies market volatility. Traders squared off positions, intensifying the day’s downward momentum.

8. Profit-Booking

After a recent rally, the Indian market was ripe for profit-booking. Investors who had made significant gains in the past few sessions decided to take some money off the table, contributing to the downward pressure.

Market Reaction and Key Data Points

• The India VIX, a measure of market volatility, rose by 4%, reflecting increased fear among traders.
• Total market capitalization on the Bombay Stock Exchange (BSE) dropped by ₹1.21 lakh crore to ₹443.27 lakh crore.

Top Gainers 

On a brighter note, Adani Group stocks rallied amid broader market turmoil. Shares of Adani Total Gas surged by 16%, while Adani Energy Solutions and Adani Green Energy hit their upper circuit limits. This followed the group’s clarification about allegations of violations, which had earlier caused significant losses.

Top Losers

Infosys, Reliance Industries, ICICI Bank, HDFC Bank, and TCS collectively contributed to the Sensex’s 710-point drop. The Nifty IT index fell sharply by 2.4% in Thursday’s session, impacted by weaker sentiment following US inflation data that pointed to a slower-than-anticipated pace of rate cuts.

All 10 stocks in the index ended in negative territory. LTTS and Infosys led the declines, with both slipping around 3.5%. Other major constituents, including HCL Tech, LTIMindtree, Mphasis, Tech Mahindra, and TCS, recorded losses ranging from 1% to 2.5%, reflecting the broader weakness in the sector. Source: Economic Times

What Should Investors Do?

While feeling anxious during market downturns is natural, it’s crucial to maintain a calm and rational approach. Here are some tips for investors:

• Stay Informed: Keep yourself updated on market news and economic indicators.
• Avoid Panic Selling: Making impulsive decisions based on fear can lead to significant losses.
• Diversify Your Portfolio: A diversified portfolio can help mitigate risk.
• Consult a Financial Advisor: Seek professional advice to make informed investment decisions.
• Long-Term Perspective: Remember, the stock market is cyclical. Focus on long-term goals and avoid short-term fluctuations.

Conclusion:

The sharp decline in the Indian stock market on November 28th resulted from domestic and global factors. While the market may experience short-term volatility, it is important to maintain a long-term perspective. Investors should focus on quality stocks, diversify their portfolios, and avoid impulsive decisions based on short-term market movements.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.