LKP Finance has approved a 4:1 bonus issue, granting shareholders 4 new fully-paid equity shares (FV ₹10) for every 1 existing share, funded from its securities premium after a ~400% one-year share price rally.

LKP Finance 4:1 bonus issue – Key details

• Company: LKP Finance Limited – listed NBFC engaged in financing, capital market and related financial services.

• Bonus ratio: 4:1 – shareholders get 4 additional fully paid-up shares for every 1 share held as on the record date (to be announced).
• Face value: All shares (existing and bonus) carry ₹10 face value.
• Funding source: Bonus shares will be issued by capitalising the Securities Premium Account; no cash outflow.
• Authorised capital increase:
  • Old: ₹30 crore.
  • New: ₹110 crore, to accommodate 4× equity expansion and future needs.
• Paid-up capital impact:
  • Before bonus: ₹15.36 crore (1,53,61,650 shares).
  • After bonus: ₹76.80 crore (7,68,08,250 shares).
• Timeline: Board approval on 19 January 2026; bonus shares expected to be credited / dispatched by 19 March 2026, subject to shareholder and regulatory approvals.
• Share price context: Stock delivered ~400–408% return in 1 year, trading around ₹1,096–1,149 near the announcement.

What the 4:1 bonus means for shareholders

• If you own 1 share, post-bonus you will own 5 shares (1 old + 4 new).

• If you own 100 shares, post-bonus you will own 500 shares.
• Total investment value does not change on ex‑bonus day in theory; the share price typically adjusts downward to reflect the 5× increase in number of shares.
• Example: If LKP Finance trades at ₹1,100 pre‑bonus, a pure math adjustment implies a post‑bonus reference of around ₹220 (₹1,100 ÷ 5), while your total value (shares × price) stays broadly similar, ignoring market moves.

The company explicitly states the bonus aims to “reward shareholders and enhance stock liquidity”, a typical rationale when reserves are strong and the share price has run up sharply.

Strengths / positives of LKP Finance 4:1 bonus

• Shareholder reward after multibagger run: 4:1 bonus follows a ~400–408% price rally in 12 months, signalling management’s confidence and willingness to share perceived success with investors.

• Improved liquidity and affordability: Increasing shares from 1.53 crore to 7.68 crore and lowering the per‑share price post‑adjustment can attract more retail participation and tighter bid‑ask spreads.
• Capital structure strength: Funding the bonus purely from securities premium and simultaneously increasing authorised capital to ₹110 crore indicates robust reserves and room for future expansion.
• No dilution of percentage ownership: Each shareholder’s percentage stake remains the same; only the number of shares and paid‑up capital change.
• Signal of financial health: Bonus issues are typically associated with companies that have strong balance sheets and accumulated reserves, often viewed positively by the market.

Risks / things to be cautious about

• No change in intrinsic value: A bonus issue does not improve fundamentals by itself; EPS and book value per share get mathematically diluted as shares increase 5×.

• Post‑bonus volatility: After ex‑bonus, re‑pricing and profit‑booking can cause sharp short‑term price swings; multibagger moves already raise the risk of corrections.
• Perception vs reality: Retail investors may misread bonus as “free money”; in reality, market cap remains broadly the same, and future returns depend on earnings growth, asset quality and business performance.
• Higher equity base: Paid‑up capital jumps 5×; to sustain or grow EPS, the company must generate proportionately higher profits, or valuation multiples must expand.
• Regulatory & approval risk: Bonus issue and capital increase are subject to shareholder approval and regulatory clearances; delays could shift the expected credit timeline.

FAQs

1. What is the LKP Finance bonus issue ratio?
LKP Finance has approved a 4:1 bonus, meaning 4 new fully paid-up equity shares (FV ₹10) for every 1 existing share held on the record date.

2. When was the LKP Finance bonus issue announced?
The board approved the bonus issue on 19 January 2026, along with an increase in authorised share capital from ₹30 crore to ₹110 crore.

3. What is the record date for LKP Finance’s 4:1 bonus?
The record date has not yet been announced; the company has stated it will be communicated in due course. Shareholders of record on that date will be eligible for bonus shares.

4. When will the bonus shares be credited?
LKP Finance expects the bonus shares to be credited / dispatched by 19 March 2026, subject to shareholder approval and regulatory processes being completed without delay.

5. How will the bonus issue affect my number of shares and value?
If you hold X shares, you will get 4X new shares, ending with 5X shares. In theory, the share price adjusts to about 1/5th of the pre‑bonus level, so your total investment value initially remains similar, ignoring market movements.

6. Does the LKP Finance bonus issue change the company’s fundamentals or EPS?
Fundamentals like total earnings and net worth do not change due to the bonus; however, EPS and book value per share will decline mechanically because they are spread over five times more shares.

7. Why did LKP Finance choose such a large 4:1 bonus?
The company cites rewarding shareholders, enhancing liquidity, and leveraging a strong securities premium balance after a ~400% one‑year rally, alongside a significant increase in authorised capital to support growth.