Knowledge Base

Bonus shares are additional shares that a company gives to its existing shareholders at no cost. You don’t pay anything, the shares are credited to your DEMAT account automatically based on how many shares you already hold.

For Example : The company announces a bonus ratio for example, 1:1 or 1:2.

• 1:1 means you get one extra share for every share you hold
• 1:2 means you get one extra share for every two shares you hold

If you hold 500 shares and the company announces a 1:1 bonus, you’ll have 1,000 shares after the bonus is credited.

Does your holding value change?

Not immediately. When bonus shares are issued, the stock price adjusts downward proportionally on the ex-date. So while you have more shares, the price per share drops and  keeping the overall value roughly the same on that day.

Whether the value grows after that depends on how the stock performs in the market.