GAIL Shares Rise Ahead of Bonus Shares Issue; What Investors Need to Know

Gail Shares Raises

(Gas Authority of India Ltd.) GAIL shares rose almost a percent in Tuesday’s opening deals at Rs 92 apiece on the BSE as it started trading ex-bonus, a day before its record date for the bonus issue of equity shares, as the stock began trading ex-bonus, one day before that date.

To determine whether shareholders are eligible for the issuance of bonus shares, the company has set September 7, 2022, as the record date, which is a day before the record date. An ex-date is a day in advance of the record date for investors to be eligible for bonus shares. A bonus share is a fully paid additional share of stock that is issued by the company to its shareholders.

After the company’s quarterly results were announced in July, GAIL, one of India’s largest natural gas companies, announced a 1:2 bonus issue, which will mean that each shareholder will receive one bonus share for every two shares that they hold.

A meeting of the Board was held today, 27th July, 2022, at which the Board recommended that Bonus Shares be issued in a ratio of 1:2. As a result, there will be one new bonus equity share(s) of Rs 10/- each for every two existing equity shares of Rs 10/-. According to a filing on the exchange, the company stated in an exchange filing that the shareholders must approve the dividend, which is expected to take place on 26th August, 2022, with a full price of 10/- each fully paid up.

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GAIL Shares Rise Ahead of Bonus Shares Issue; What Investors Need to Know
GAIL Shares Rise Ahead of Bonus Shares Issue; What Investors Need to Know

What is EX- Bonus?

It is important for investors to be aware of the Ex-bonuses date so they can be eligible for bonuses. In general, investors need to buy shares of a company at least a day or two before the Ex-bonuses date in order to be eligible for bonuses. This is due to the T+1 and T+2 settlement cycles.

Gail is a large-cap stock listed on the BSE under the ‘A’ group for settlement with a 2-day settlement cycle, which means that the shares you bought will get credited to your Demat account two days after your purchase.

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Financials for GAIL

As a natural gas explorer and producer, GAIL is owned by the government of India, and it is primarily involved in processing and distributing natural gas. As a result of bumper margins from gas marketing, the largest gas utility reported a 51 per cent increase in net profit in the June quarter, at Rs 3,250.9 crore, as against Rs 2,157 crore in the same period last year. In the April-June quarter, the company saw a doubled turnover from Rs 17,702 crore to Rs 38,033 crore.

Gas marketing margins made up for a 12.5% decline in the company’s earnings from the gas transportation business, as well as a 74% decline in petrochemical earnings due to the drop in gas marketing margins.

Investing: Should you do it?

In an earlier report on August 28, ICICI Direct gave a buy call on the stock after the company was said to have engaged in negotiations with a subsidiary of Gazprom Germany, where the Russian company owns a stake, about importing natural gas to India from Gazprom Singapore.

This is evidently going to benefit India as it will be able to procure gas under contract at a lower price than the spot LNG prices, so it is expected to benefit from this.

As a result of a reduction in the cost of gas sourcing, gas utilities such as Gail India and Petronet LNG will be able to increase their volume of offtake in industries such as CGD and fertilisers.

Gail India was recommended as a buy call by the brokerage with a target price of Rs 160 per share.

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