r/NepalStock • u/imcgr • 3d ago
Bonus Share/Dividend Bonus shares = stock split?
When companies in NEPSE give bonus shares and the price drops after adjustment, isn’t that basically just a stock split? Any real difference for us investors?
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u/Stonks_gone-wild 3d ago
Bonus share ans stock split may seems same tara aakash jamin ko farak cha .. for eg hazur ko euta share lai stock split ma 1:4garyo vane hazur ko euta share lai 4 ota ma divide garera hazur sanga 4 ota share huncha . Tara hazur le bonus share paunu vayo vane euta pailai share vayo ani tesma 4 ota thapiyera hazur sanga 5 ota share huncha
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u/imcgr 3d ago
Tyo bhaneko ta herne tarika matra farak haina ra? For example, suppose you had 100 shares worth Rs.1 each. After 50% bonus shares, you’d have 150 shares worth ~0.66 each. Isn’t that basically the same as a 3 for 2 stock split i.e. 1:1.5 split?”
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u/Stonks_gone-wild 3d ago edited 3d ago
no no they react differently on balance sheet. stock split decrease face value of stock while In a bonus the company transfers funds from free reserves to share capital account and issues new shares with the same face value as existing ones.. its more of a accounting differences which can result in different financial reportings, different liquidity etc etc which may affect share's value in future
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u/imcgr 3d ago
Ahh yes I needed this as answer. Sorry I come from a STEM background so I was not familiar with the internals of issuing bonus shares.
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u/Stonks_gone-wild 3d ago
np mate . afu le janeko aru lai sikhaune ra aru le janeko afu le sikhera nai ho jindagi ma badhne .. ani arko chai bonus chai dividend kai rup ho .. hazur tyo company ko pani sahu vako vayera company le diyeko kura ho . tara stock split chai hazur kai jagga 5 bhag laidiye jasto hazur kai share split gardeko ho
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u/Ok-Apple-4810 1d ago
Euta main difference vaneko chai bonus share ma tmro par value ( 1 unit = Rs 100) same nai hunxa vane , tmro 1:2 stock split ma tmro vako 1 unit 2 unit hunxa each Rs 50 each
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u/Ba-ba-boy 3d ago edited 3d ago
Giving bonus shares doesn't mean they are buying the shares at current market price and giving it your acc. They are increasing the no of shares while the total value of all the shares combined remains same. Now divide the constant total amount by the more no of shares, this will cause the price to decrease a bit. Kinda like inflation but not really, the share is less valuable due to averaging.
Edit: Stock spliting is new term for me so learnt about it, bonus is not stock split ig as the stocks aren't being split into diff categories with diff price so if that helps your curiosity. Stock split ig, is like a company splits its share into 2 types one which represensents 1 kitta and other which represents 0.1 kitta so two different schemes idk just a way to understand how it is diff from bonus shares
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u/Far-Living-9889 3d ago
maile bujheko anusar chai
Stock Split garda Face Value decrease huncha ani price ni drop bhayesi more investors aauchan ani liquidity ni badhcha.
Bonus chai company le money rakhcha but teso satto stock dincha because they think they can grow more.
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u/Ok-Passage-4342 3d ago
Math herni ho bhani same nai ho,tara Company ko future pani herni ho bhani different ho
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u/Gauleybhai 3d ago
Free ma bonus paiye pani, bonus meroshare ma list vaepachi cost badeko huncha intial investment price ma.. tyo chai kina hola?
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u/imcgr 3d ago
what do you mean? list bhayepachi ta wacc ghatcha ni
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u/Gauleybhai 2d ago
Wacc ta ghatcha tara total cost few amounts le baddo raicha.. meroshare app ma herata.. bonus ko gave value add hune ho ki?
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u/IisMEdoYOUdoHOW 2d ago
Bonus share is not free.
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u/Gauleybhai 2d ago
Can i elaborate it more?
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u/Far-Living-9889 2d ago
price adjust huncha bhanna khojya ho
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u/Gauleybhai 2d ago
Haina price ta adjust vaihalcha, maile vaneko suppose 1lac ko investment ma 100 kitta kineu ra tyo company le bonus diyo. Bonus kitta chai 10 aayo vane khata ma.. investment 100000 nai hunu parne ho tara bonus pachi 100000 bta alik thorai badeko dhekhayo meroshare ma… tyo badeko chai deko bonus ko face value add vako ho ki k ho?
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u/IisMEdoYOUdoHOW 1d ago
Suppose the face value is Rs 100. If you get 10 bonus shares then the cost of those 10 to you is 10 * Rs 100 = Rs 1,000. So if you have originally bought you share at total of Rs 1,00,000, your new total cost will be Rs 1,00,000 + Rs 1,000 = Rs 1,01,000.
Bonus shares are not given to you for free by the kindness of their heart. Rather than giving you Rs 1,000 as your dividend, they are giving you equity of the company. And yes, you also pay CGT on your bonus share, either directly by the company, or, you have to pay it yourself.1
u/Gauleybhai 1d ago
But tyo 1000 rs ta maile pay gareko hunna ni bonus share ko… tyo 1000 afai add vako huncha initial investment ma company le bonus dida.. esle ramro ho ki naramro huncha? Cost badepachi profit kaam vako jasto ho ki eutai ho?
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2d ago
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u/sky___BLUE 3d ago
Imagine you have 1 bigaha land.
Bonus shares are you get 2 Katha extra without any cost.
Split is just that before you used to count your land as 1 bigaha, now you say you have 20 Katha, just a smaller measurement used. You didn't get any extra land in split.
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u/imcgr 3d ago
You are getting extra shares w/o any cost but the value of each share decreases 😭this is literally the definition of stock split
Imagine you have 1 bigha land, bonus shares are like: you are teleported to a different universe where 1 bigha = 22 katha. you feel like you are getting 2 kathas extra w/o any cost 😭😭
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u/sky___BLUE 3d ago
Well, if the value of the shares are not adjusted then it would be creating a chunk of extra market cap out of thin air. This is basic economics.
I don't understand how you can't see the difference between bonus shares and stock splits.
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u/goodday_best 2d ago
📊 Case 1: Stock Split (1:2)
- Company splits 1 share into 2 shares.
- Your 100 shares → 200 shares.
- Price adjusts: $100 ÷ 2 = $50/share.
- New value = 200 × $50 = $10,000.
✅ Investment value unchanged.
✅ Company’s reserves unaffected.
✅ Seen as a technical move to improve affordability/liquidity.
📊 Case 2: Bonus Shares (1:1)
- Company gives 1 free share for each share held.
- Your 100 shares → 200 shares.
- Price adjusts: $100 ÷ 2 = $50/share (because company capital is spread over more shares).
- New value = 200 × $50 = $10,000.
✅ Investment value unchanged.
✅ But company’s reserves reduce, since bonus comes from retained earnings.
✅ Seen as a reward to shareholders.
AI le bhaneko
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u/barbad_bhayo 3d ago
No then every dividend is stock split by your logic
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u/imcgr 3d ago
But I genuinely do not understand the practical difference when a stock splits vs when it issues an x% bonus shares and the price is adjusted accordingly. Also I noticed that the holding days for bonus shares are counted only when they are listed in meroshare which takes months, and the taxation is calculated based on that. I just don’t the craze behind scrips that issue “bonus shares”
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u/[deleted] 3d ago
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