WHY HAVE AN ATTRACTION OF BONUS OR SPLITS..Comments by Bhavikk Shah

HI FRIENDS,

OMDC is mulling to give Bonus and Split - Lets assess the possibility of OMDC giving BONUS & SPLIT-

OMDC can definitely declare SPLIT of Shares from Rs.10 face value to Rs.1.00 (which will bring OMDC in line with NMDC & SESAGOA) which will bring OMDC total share from current 6,00,000 shares to 60,00,000 shares but first it may issue BONUS in ratio UPTO 1:10 making the total shares to 12,00,000.....

So First BONUS & THEN SPLIT - so from 6,00,000 Shares to 60,00,000 shares & then split from FV 10 to Re.1 so from 60,00,000 shares to 6 Cr shares.

Company currently have Reserves & Surplus of Rs.802.96 Cr, which is more than enough for the bonus to the tune upto 1:9 & then split from Face value of Rs.10 to Re.1.00

So you may see OMDC at around Rs.500/sh (If bonus & split happens).....but looking at sesagoa and Nmdc it may trend to trade at around 200-250/sh

Now, personally I dont like Bonuses or split as it does not make any difference to your investment...
e.g. you bought 1 share of Rs.100 and after split you have 100share...what difference does it make ..your investment price is still at Rs.100 for 100 shares so Re.1 for 1share..similarly goes for bonus..
You bought 1 Share of Rs.100 and after bonus of 1:1 you now have 2 shares at Rs.100 so price of your 1 Share is Rs.50/ but your total investment is still Rs.100 right..so does this increased any value in your investment ..NO..
Then why to have an attraction of BONUS or Split...

In-fact, Bonus or split Reduces your RESERVES & SURPLUSES to that extend..
It gives more Shares or supply of more shares in the market..which sooner or later comes to sell in the market, which will bring prices to come down...
Issuing BONUS & SPLITS is nothing but having more partners on your current net worth..
First , you had 6,00,000 shares or partners on the net worth Rs.802.96 Cr which was Rs.13382.74/sh
and after BONUS & SPLIT the partners on net worth of Rs.802.96 will increase which is nothing but sharing your part of the share in the company...


So sell it as soon as the news of OMDC Bonus & split is declared and buy after the split and bonus

So you may see OMDC at Rs. 500/share (If this happens) - http://t.in.com/6cll
but looking at sesagoa and Nmdc it may trend to trade at around 200-250/sh also because of it own closed mines problems....
http://www.bhavikkshah.

blogspot.in/

Bhavikk Shah

-----------------------------------------------------------------------------------------------adwisecapital@gmail.com-------------
 COMMENTS RECEIVED

adwisecapital@gmail.com
Fully agree with Bhavikk Shah's views with only a difference that is
positive for minority share holders in case of bonus issue that mostlyadwisecapital@gmail.com
good corporations try to maintain dividend pay-out which may increase
regular income in hands of LT small investors. e.g. if DPS is Rs.4/-
maintained post 1:1 bonus would double dividend receipt in hands of
the share holder.


Raja

adwisecapital@gmail.com