Two-wheeler major TVS Motor Company Ltd. has said that it has scheduled a meeting of the Board of Directors on March 20, 2024 to consider issuing bonus shares to its shareholders.
However, the only difference being that instead of an ordinary issue of bonus shares, the company plans to issue bonus shares via non-convertible redeemable preference shares (NCRPS).
What Is NCRPS?
Non-Convertible Preference shares are those that are issued to shareholders but cannot be converted to equity shares.
These shares are preference shares and hence they do not carry voting rights. They neither result in the expansion of the company's equity base or increase its debt.
Such shares do not require an immediate payout and are cumulative in nature. On redemption, the shareholders receive a cash payout since these shares do not convert to equity.
More details on the nature of the preference shares, redemption date, timelines, will be shared after the board meeting.
Earlier on March 11, TVS Motor Company approved an interim dividend of ₹8 per share, which is about 800% of the face value, for the financial year ending March 2024. The record date for the said dividend is fixed as March 19, 2024.
The dividend payout will cost the company about ₹380 crore.
TVS Motor Company reported a net profit of ₹593.4 crore for the quarter ended December 31, 2023, beating a CNBC-TV18 poll estimate of ₹539 crore. TVS Motor's net profit jumped more than 68% in the October-December quarter on a year-on-year (YoY) basis.
Following its December quarter earnings, foreign brokerage Goldman Sachs maintained a 'Neutral' view on the TVS Motor stock while raising the price target of ₹2,180 from an earlier target of ₹2,050 per share.
BofA Securities had also retained its 'Neutral' stance on TVS Motor with a price target of ₹2,160.
TVS Motor shares have already surpassed both Goldman and BofA's respective price targets.
Shares of TVS Motor Company are trading 3.2% lower at ₹2,080. The stock has gained 4% so far this year and has doubled over the last 12 months.
(Edited by : Hormaz Fatakia)
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