Bonus share vs. Stock split

The names stock split and bonus issue are quite deceptive. Listening to "stock split" seems as if the number of shares might increase and when one talks about "bonus issues", it seems that the company is giving some extra shares, that too for free. But is it really true?
Stock splits and bonus issues are two ways that companies can make their shares more affordable and accessible to investors. This can lead to an increase in demand for the shares, however, it is important to remember that stock splits and bonus issues do not change the underlying fundamentals of the company.
In this video, we discuss these two corporate actions in detail and also talk about how they are different from each other in Hindi.
Refer to the below links to learn more:
1. Face value, book value, market value - • Difference between fac...
2. Impact of bonus and split on F&O do check out the video - • Impact of corporate ac...
3. Learn more about the stock market here: zerodha.com/varsity/
Time Stamps
00:00 - Introduction
00:45 - What is Stock Split?
04:05 - Why companies do Stock Split?
04:35 - What are Bonus Shares?
07:45 - Why companies do Bonus Issue?
08:20 - Difference between Stock Split and Bonus Issue
08:50 - Impact on Balance Sheet
11:38 - Conclusion
#stocksplit #bonusissue #investing #stocks #finance #trading #stockmarket #financialeducation

[@jashankumar4700]

I want to say that those people who are saying that stock market is like gambling see this content to change your mindset

[@harjeetkhurana964]

Very well explained and easy to understand.. बहुत बढ़िया … अच्छे से समझ आया ..

[@rupam39]

Wow....Amazing explanation. Blown away by the simplicity of explanation technique, when these sections were explained: 1.Difference between stock split and Bonus issue 2.Impact on balance sheet These videos are amazing than the varsity app. Also, I would love a simulator application, that teaches or rather train on how, when to execute a trade, be it stocks, f&o or anything. Please🙏🙏🙏🙏

[@SaregamapavanN]

Absolutely amazing knowledge sharing, kudos to khurana g 😊

[@nikhil11vtx]

Khurana ji…aap cha gaye…Gratitude from one Khurana to another 🙏🙏🙌

[@osmreview]

My favourite teacher lot’s of respect 🙏

[@mrajesh1947]

Thank you for making content so detailed with proper examples, and I really loved it, but it would be more helpful if you could make content also in english.. I can't understand hindi, but the presentation with examples and your explanation made me understand the subject.

[@amarkantkumar4233]

Well done Astha. Well done team .Please continue to make more videos in Hindi. Can do entire fundamental analysis playlist in hindi itself

[@ask2malik]

Thanks for making it very simple to understand.

[@meenakshitripathi9720]

Informative...well presented 👍

[@Tinku1786]

Very informative video. So is the Market cap and total equity of a company are same? thanks.

[@abhishekparjane8276]

Please Continue this series in hindi👍

[@krashish1]

Explained in perfect manner..

[@VARSHAKUMARI-hz9xh]

superbbbb explanation mam amazing very well done

[@anirban3190]

Mam, Thanks for your video. I am referred to this video by Karthik Sir. Meanwhile, at last you spoke that " Share capital is adjusted by stock split and Reserve is adjusted by bonus issue". However, we saw that share capital remains the same despite the split. So, will it be like "Face value is adjusted by stock split"? Please confirm if I am missing somewhere.

[@pradeepkumar-ho7ce]

Thanks for sharing basic knowledge of Stock split and Bonus share. I have one question whether Face Value could be lower than 1??

[@GATExpresso]

Great initiative by zerodha for learners . Thank you

[@prashanttripathi5179]

That is quality content 👍🏻 Very Nice Explanation. Thanks Zerodha Varsity😊

[@AB12395]

Well explained...but i have a question if price falls after bonus,then what's the benefit of bonus?

[@achalnagar724]

Nice....keep sharing in this easy language but if possible share everyday

[@swapnilsapkal2391]

Amazing content, in simple language

[@brijmeena8081]

Thanks for informative videos ❤

[@amrit1144]

Thank you ji

[@stockwonders]

Nicely explained

[@pradeepsingh-mh7ir]

Nice video, again. Madam, pls add a view point of a Promoter, Investors and Public for every topics with example, so that orientation of public could be clear. For example, here u hv explained that Asset would be same for the promoter, but what impact of Bonus or Split happens to public wealth. I know this, but everybody don't knows the same. This would be very interesting and very helpful for everyone......i think so.🙂

[@ankitp787]

Good knowledge sharing Madam But please provide Hindi version Why company listed IPO

[@guptaabhishekh3879]

Ma am auction option which is introduce in zerodha can you explain lain tha

[@cliffordrodrigues9159]

Insightful, Thanks

[@pankajagarwal1738]

Dono case me book value par kya impact hoga

[@brijmeena8081]

In which scenario (bonus share or stock split) investor have maximum Chances of profit?

[@AkashSingh-je5nm]

Well explained mam

[@anirudh123cool]

Well explained

[@arpitjhalani8227]

In bonus share reserves get down where it goes investor didn't get any benifit from it only in books it rotate

[@neha4mrs]

Which cases mein stock split hote hain and which cases mein bonus ...can you please clear my doubt

[@simpletutorial4123]

good teacher

[@vimalak]

Do we really get the extra shares added to our account automatically in stock spilt?

[@anishagrawal6276]

MADAM U R GREAT

[@navanu100]

Good show

[@shivammishra5730]

but how investors gets benifits from bonus

[@ramsakal8290]

Liquidity increase karke company ko kya profit hota hai.?

[@vinayrashivadekar5654]

9:05 eye 👁️👁️ opening calculation

[@randomvideo6]

Samjhaya asaan tarike me apne par iska asal life me kya impact padta hai wo thoda complicate hai..

[@AbhishekKumar-uv7kq]

Upload more videos regularly.

[@Mr.versatile529]

In 3:1 bonus 3 shares given per 1 share so now number share is 4 but he now only need to pay 3 face values of share bcz 1 face value already given So if he have 6o cr reserve he pay 30 cr to investors not 40cr right

[@ayurvedwithrakesh]

Good ❤

[@Akshaykumar-tl4re]

Hello mam stop loss ke upper video

[@kashish6733]

Well explained. I have a query, You said the issue of bonus shares makes the share price affordable. But if the face value is not going to change in case of bonus issue then how is it going to make it affordable.

[@varsitybyzerodha]

Following a bonus issue, the number of shares increase and price of the share falls. This makes the share price more affordable to the retail investors.

[@nirajdesai2291]

1.But mam as i know whenever company give divedend as something addtional to there share [they distribute profit of company] and when they want to increase market cap of company they give profit as bonus share. 2.definatly whenever company distribut something from reserve or profit it benfit investor something additional to share these is something a investor expect from a company.(these i read on Z varsity) 3.So ur point that market cap will not increase is only valid for stock split not for B share. Sorry for big note But these something i known about B share and i read Zvarsity website

[@rajendranpj7778]

Excellent video I was searching for 😊

[@hussam2152]

at 11:00 it is 2:1 and not 1:2

[@pravinnavlakhe3871]

After issuing bonus share ...in how many days it will reflect in our portfolio???.. Please guide mam

[@varsitybyzerodha]

Hi Pravin, the credit of bonus shares takes up to 15 days from the record date.

[@pravinnavlakhe3871]

Thank you

[@user-jf5kg8xg1f]

Please reply, what happened if buy shares after record date but before allotted date? Reply please as you said in video, ask if any doubt

[@varsitybyzerodha]

If you buy shares after the record date then you will not be eligible for such shares. One has to buy shares 1 day prior to record date according to T+1 settlement cycle.

[@user-jf5kg8xg1f]

@@varsitybyzerodha Thanks, please reply a query more, IF STOCK SPLIT 10:1, SO IN THAT CASE 90% LOSS ON NEXT DAY.

[@varsitybyzerodha]

Stock split 1:10, that means 1 share is divided in 10 parts. So if you have 100 shares and stock price is 750 in that case - Number of shares * Share Price = Market Capital 100 * 750 = 75,000 Now, 1000 * 75 = 75,000 Share price did fall to 75 this might seem like a loss but actually it is not because your number of shares have increased.

[@user-jf5kg8xg1f]

@@varsitybyzerodha Thanks for reply, but my view is different, I asked if I buy between record date and allotted date

[@ashutoshgupta321]

​@@user-jf5kg8xg1fthat's also after the record date only so you won't get.

[@unique_mzn]

Please upload every chapters lecture in hindi

[@varsitybyzerodha]

Hi, we'll look into the possibilities, thanks!

[@sudarshansharma3945]

I understand Hindi, but please release this video in kannada as this company is from our state

[@varsitybyzerodha]

Hi, we're looking into creating content in other languages too. We'll keep you posted.

[@ashutoshgupta321]

😂😂

[@omkar_03_]

Ek concept kaha par bhi available nhi hai....bas bonus share ka concept with example mil jata bhadiya rahata..q ki face value premium k sath kasi adjust hoti hai wo janana hai ...iss video me isi concept ka kami hai, sabhi jagah search kiya kahi bhi nahi mila yahi bhi nahi..bas ek recent example k sath bonus share wala video bana sake to banalo badi meharabani hogi

[@varsitybyzerodha]

I hope you are talking about options premium. To understand the Impact of bonus and split on F&O do check out the video- kzbin.info/www/bejne/g4mQZ6WafamDmKc

[@omkar_03_]

@@varsitybyzerodha no Absolutely no I m not talking about options premium. I m talking about share price premium Share-market price = face value + premium In the above example you just showed impact on face value..not the whole share... Plz read my above comment again I want to know impact on share price..how this affects

[@varsitybyzerodha]

Share market price = is not including FV. FV is a notional value created at the time of issuing the share and the premium that you are referring to is 'Securities premium', which is a balance sheet item and sits as a 'Security premium reserve'. Also, in our example, both in this videos (and the other one), we have discussed the impact of corporate action on FV, balance sheet, and the market price of the security. Request you to watch the entire video.

[@snandansharma21]

​@varsitybyzerodha Actually, we don't call it 'Securities Premium Reserve' anymore. It's only 'Securities Premium' now

[@gouthamchunduru]

But what are they gaining out of bonus? If affordability is the only reason, why can't they just do stock split?

[@varsitybyzerodha]

This is because bonus issue is also one of the replacements to cash dividends. If the company is unable to pay dividends, it can issue bonus shares. But stock split cannot be a replacement for cash dividends, thus bonus.

[@gouthamchunduru]

@@varsitybyzerodha but incase of dividend we get real money. What will a shareholder gain if a bonus is given? Sry for these naive questions

[@varsitybyzerodha]

The existing shareholders get additional shares without paying for such shares.

[@gouthamchunduru]

@@varsitybyzerodha Hmm. But what is the advantage of having 2 shares worth Rs100 instead of 1 share worth Rs200

[@gouthamchunduru]

@@varsitybyzerodha pls help me understand above🥲

[@vincentpinto1127]

Thanks for a well-made video, and well explained too! At 11:42, you finished saying that share capital got adjusted. Actually, no! Share capital did NOT get adjusted. It is the face value that changed and thus number of shares increased, KEEPING the share capital unchanged. Very likely this was an inadvertent slip of the tongue. Please have your video editor insert a posted noted saying the above. It's very easy to do. Other than this, excellent video. Thanks. Also, a very common pronunciation mistake: Price is NOT pronounced as prize!! No zz sound at the end. The zz is NOT pronounced as in ज़रा. It is pronounced with a ss at the end. As in the ss in सपना. Try it a few times and you'll get good at it. All the best. Please tell your other colleagues too. Its a very very common mistake.

[@varsitybyzerodha]

Thank you for pointing it out. It's a verbal typo, will be more careful in the future.

[@SuperRockstar007]

yadnya missing you, left with only boys and men ha ha