Date: February 4, 2008
BONUS CANDIDATES FOR 2008
The word "Bonus" has certain feel-good factor, more so with retail equity investors. But not all bonus share announcers are credible and profitable, with many in past having used it as a tool to draw investors attention and jack up the scrip valuation. Investors gain from only genuine bonus share offering. Hence, it becomes imperative to identify fundamentally strong companies who are offering bonus shares to increase shareholders' wealth.
Following is the list of companies that had issued bonus and their performance there after:
Name of the company Ansal Properties & Infra Bajaj Electrica Bank of Rajastan HCL Tech. Ltd Jai Corp Ltd KPIT Cummins Ltd NIIT Ltd In the above table we can see the companies share prices have gone up when these companies announced Bonus issues.
In case of bullish market, prices go up till ex date. After that it comes down or doesn't appreciate. While in bearish market this will be different story all together. The capital appreciation is depending upon valuations, cash flows, and financial condition. That is the reason why many companies who have failed to make positive impact on the share prices.
BONUS CANDIDATES FOR 2008:
Following are the companies that we believe are bonus candidates for 2008. These companies are fundamentally very strong having good reserves. We believe that these companies will bring capital appreciation.
DREDGING CORPORATION INDIA LTD.
CMP-780 52 Week High-1356 52 Week low-461 DCI helps to ensure the continuous availability of the desired depths in shipping channels of the Major and Minor Ports, Navy, fishing harbors and other maritime organizations. The horizons of dredging activities are fast expanding worldwide, and its services are increasing in demand and put to use in the areas of Environmental Protection, Tourism, Flood Control, Irrigation, Power Generation, Port development, Mining, Reclamation, Laying of Off-shore Pipelines and so on.
Dredging corporation of India Ltd clinched a place on the list in the wake of govt. plea to all the PSU's with strong reserves to announce bonus issues. Strong reserves of Rs.1105 cr, 39.50x if it's paid up capital. It has the lowest Price to Book ratio in all the PSU's making it lucrative. Strong investment in country's port development to create huge opportunities for the company. With these growth prospects, we recommend you to buy this stock at current level.
IVRCL INFRA. & PROJECT LTD
CMP-450 52 Week High-575 52 Week low-263 IVRCL infra. & Project Ltd operates in water & environment, transportation, buildings & Industrial structures and Power sector. The company has a significant presence in the infrastructure business the growth sector of today. The reserves have increased to Rs.1293 cr and book value stood at Rs.102. the company has so far announced 1 bonus in 1999. In the coming two years it is expected to outshine its past financial performance. It has strong order book of Rs.10000 cr. Its Roads as well as T&D projects provide a diversification in the company's strong order book. Its entry in to new projects like mining & oil exploration are expected to add value to the company going forward.
IVRCL holds value in other subsidiary companies like IVR Prime, which is into booming real estate business. IVRCL is not only in position to declare Bonus issue but also its scrip has the potential to provide capital appreciation.
Both these companies are our Bonus candidates for the beginning of this year. We believe that these companies will increase its shareholder's wealth.
Thanks
PMS Dept.