Bonus Shares: TVS Motor's NCRPS issue explained

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.

TVS Motor will issue four NCRPS as bonus for every one equity share held by shareholders as on the record date. The total cost to the company for the same will be ₹1,900 crore, which it plans to utilise from its reserves.

The NCRPS will have a 12 month tenor from the date of allotment, post which they would be redeemed. Coupon rate for the same has been fixed at 6% per annum. This means that for every one share, shareholders will receive NCRPS worth ₹40 and at the end of 12 months, that will turn into ₹42.5, post the addition of the interest component.

Earlier on March 11, TVS Motor Company approved an interim dividend of ₹8 per share, which is 800% of the face value, for the financial year ending March 2024. The record date for the said dividend was March 19, 2024.

The dividend payout will cost the company about ₹380 crore.

TVS Motor has already earmarked ₹2,000 crore worth of capex plans and has debt worth ₹2,200 on its books.

Shares of TVS Motor are off the opening highs, currently trading 1.1% higher at ₹2,056. The stock has risen 95% over the last 12 months.