Shares of Vardhman Special Steels, which have given multibagger returns to investors in the last one year period, will trade ex-bonus on May 26.

The company had earlier announced a bonus issue of equity shares to investors in the proportion of 1:1. For every share existing investors hold, they will get one additional share.

The record date for the same is fixed as May 26. The bonus issue is subject to approval of shareholders of the company.

A company issues bonus shares for their shareholders in order to increase the liquidity of the stock as well as with the aim to decrease its stock price to make it affordable for investors.

Bonus shares are fully paid additional shares issued by a company to its existing shareholders. When a firm issues bonus shares, its shareholders do not have to incur any extra costs to get them.

All shareholders who own shares of the firm before the ex-date, which is determined by the firm, are eligible for additional shares.

On Thursday, shares of Vardhman Special Steels closed 2.35% lower at Rs 414 apiece on NSE. The stock had a stellar run in the last one year period, doubling investors' wealth in that period. So far this year, it is up nearly 34%.

Vardhman Special Steels is a producer of special and alloy steels in India. The company mainly caters to special and alloy steel hot rolled bars for engineering, automotive, tractor, bearing and allied industries. The company has long term relationships with reputed customers globally including Toyota, Maruti, Hyundai, Hero Moto Corp, Caterpillar, Hino Motors and Bajaj, among others.

According to trendlyne data, the company has an average target price of Rs 425 and the consensus estimate represents a marginal upside of 2.66% from the current levels.

Source:  Economic Times