Shares of Tata Group retail company Trent Limited fell more than 33% on Thursday after the stock turned ex-bonus following the company’s bonus issue announcement.
The stock opened at around ₹2,833.45 compared with its previous closing price of ₹4,258.10. The decline was due to a bonus share adjustment and did not reflect any underlying loss in shareholder value.
Trent Limited recently announced a bonus issue in the ratio of 1:2, under which shareholders will receive one additional share for every two existing shares held. Thursday was designated as the ex-date for the bonus issue, resulting in an automatic adjustment in the share price.
Under a bonus issue, a company allocates additional shares to existing shareholders without requiring any payment. The process increases the number of outstanding shares and reduces the price per share proportionately, while the overall value of an investor’s holding remains unchanged.
Despite the sharp decline in the quoted share price, investors did not incur any actual loss as the adjustment reflects ex-bonus pricing. Following the allotment of bonus shares, shareholders will hold a greater number of shares while maintaining the same overall investment value.
This is Trent Limited’s fourth bonus issue since listing. The company had previously issued bonus shares in 1989, 1994 and 1996.
Global brokerage HSBC has maintained its “Buy” rating on the stock. According to the brokerage’s report, the company’s retail brands, including Westside and Zudio, remain on a b expansion path.
