Bharat Electronics board approves bonus issue of 2:1

State-run Bharat Electronics Ltd announced the issuance of bonus shares to eligible shareholders on Thursday.

The PSU Navratna has announced the bonus issue in a 2:1 ratio, which means investors will get two shares for every one share held by them.

The bonus issue is subject to approval from shareholders of the company at the 68th annual general meeting (AGM), which is slated to be held on August 30, 2022.

On August 1, the company had informed the bourses that its board would meet on Thursday to consider the issue of bonus shares and the proposal was duly approved by the company board.

"The proposal to increase authorized share capital, alteration of the memorandum of association of the company, and the issue of bonus shares as stated above is subject to the approval of the shareholders of the company in the AGM scheduled to be held on August 20, 2022," the company said.

Further, the administrative ministry has accorded approval for an increase in authorised share capital from Rs 250 crore to Rs 750 crore, it added.

Ambareesh Baliga, an independent market expert, said BEL has a 55 percent market share, is almost debt-free, has consistent performance and dividend payout is nearly about 43 percent. Last quarter also, the performance was extremely good. It is uniquely positioned due to its strong track record as well as the relationship which it has with government entities."

"Now with the government's focus on Aatmanirbhar Bharat as well as Make in India for defense requirements, I think it's a huge booster for BEL. In fact, looking at a 12 percent revenue CAGR over the next four years and the other big opportunity for BEL is exports to those friendly countries, which they've been doing, but I think there's a huge opportunity still there. So looking at an EPS of about Rs 13 for FY24, which translates into a target price of Rs 390. And I think they've just declared two is to one, I think that is another trigger."

From 2015 till now, Bharat Electronics has issued bonus shares twice in the ratio of 2:1 and 1:10. The bonus shares were issued first on September 14, 2015, and later on September 28, 2017.

Bonus shares are free additional shares that a company offers to existing shareholders. Companies low on cash may issue bonus shares rather than cash dividends.