Oil India receives shareholders' nod for bonus issue, stock up 3 per cent

Crude oil and natural gas exploration company Oil India in an exchange filing today informed that it has received shareholders’ approval for issue of bonus shares in the ratio of 1:3, i.e. one equity share for every three shares held.

Oil India has fixed January 13, 2017 as the record date for the purpose of ascertaining the eligibility of shareholders for issuance of bonus shares.

There has been a secular trend witnessed in the oil and gas public sector units where almost all of them have gone ahead with their respective capitalisation of reserves by way of issuing bonus shares to the existing shareholders.

Upstream oil behemoth ONGC recently issued bonus shares along with downstream companies like IOC, BPCL and HPCL.

By virtue of issuing bonus shares, the company management tries to capitalise its reserves and surpluses. When a company issues bonus shares, the price of its existing shares comes down in proportion to the ratio of bonus shares issued. 

When the price falls, the liquidity of the share improves and that is one of the primary reasons for a company to issue bonus shares.

The share price of Oil India was up by 2.5 per cent at Rs 478.40 on the NSE.