Rights, bonus, splits no more good news for stocks

38 of 45 scrips have declined after such Announcements

The shares of 38 companies, out of a total sample of 45, whose prices got adjusted for either bonus, rights or stock-splits between January and April 2005, have seen their prices decline sharply after the respective adjustment.

A Business Standard Research Bureau study shows that out of the 45 stocks, 16 have declined between 20 per cent and 50 per cent, while 12 fell between 5 per cent and 20 per cent. The scrip price of only seven companies firmed up after the adjustment, while ten scrips declined by around five per cent each.

The shares of Interworld.com got adjusted for stock-split when the face value was reduced from Rs 10 to Re 1 per share on February 14, 2005. After adjusting for the stock-split, the stock price fell by a big 50 per cent from ex-split price of Rs 3.35 on February 14, 2005 to Rs 1.70 on April 15.

Likewise, Doctors Biotech India's share price declined by 35.2 per cent from ex-split price of Rs 8.50 on January 18 to Rs 5.51 on April 15. The stock was split, from Rs 10 per share to Re 1 per share.

Hitech Gears' shares, adjusted for a 1:1 bonus issue on March 16, has fallen by 27.4 per cent, from Rs 202.65 to Rs 147.05 now.

Similarly, the stock price of Aarti Industries, which gave a liberal bonus in the ratio of 2:1, went down by 27.1 per cent, from Rs 127.65 (ex-bonus) on February 9 to Rs 93.05 on April 15.

ING Vysya Bank's stock price also fell by 27 per cent from ex-rights price of Rs 200.05 on February 21 to Rs 146 now. The bank issued shares in the ratio of 3:1 at a premium of Rs 35 on a rights basis to existing shareholders.

Others in the category include: Karnataka Bank whose stock price has fallen 26 per cent, Ipca Laboratories (22.6 per cent), Vijay Textiles (21 per cent), Matrix Laboratories (17.2 per cent) and Gammon India (15.4 per cent).

The seven companies which bucked the trend include Vyapar Industries, whose shares appreciated 109 per cent after it became ex-bonus, Mercator Lines (ex-split prices up 20 per cent), G V Films (up 12.5 per cent ex-split), Hindustan Sanitaryware (up 5.7 per cent ex-bonus), Prraneta Industries (4 per cent ex-split) and Gujarat NRE Coke (1 per cent ex-bonus).