According to analysts, the surge in bonus issues this year was due to a change in the tax rules aimed at stopping the practice of bonus stripping, which kicks in on April 1.
Listed Indian companies have been announcing the issue of bonus shares this year even though market conditions are challenging and higher inflation and geopolitical tensions are eroding earnings.
At least 143 companies have announced bonus shares so far in 2022, the most since 2006, when 152 companies issued free shares, according to data from ACE Equities. In 2021, about 120 companies announced bonus issues, while in 2019 and 2020, the figures were 72 and 46, respectively.
Analysts said bonus issues surged this year ahead of a change in tax rules. The government amended Section 94 (8) of the Income Tax Act in the budget in February to stop bonus stripping. The new rules are applicable from April 1, 2023.
Dr VK Vijaykumar chief investment strategist at Geojit Financial Services said although this year has been difficult from an earnings perspective amid weak margins and higher interest rates, some sectors and some companies within sectors are doing well.
Source: https://www.moneycontrol.com/news/business/earnings/more-than-140-companies-issue-bonus-shares-in-2022-highest-since-2006-9493751.html