eClerx Services bonus shares explained: Why the stock price may fall sharply today

Shares of eClerx Services Ltd, which offers business process management, automation and analytics services, are set to turn ex-bonus on Friday in the ratio of 1:1. Shareholders will receive one additional share for every one held, taking their total holding to two shares. The stock settled at Rs 3,153.15 apiece on Thursday, up 1.22 per cent ahead of the corporate action.

Today is the record date for determining the eligibility of eClerx shareholders for issuance and allotment of bonus share. At the market open, the share price is expected to adjust automatically to account for the bonus issue. On some trading platforms, this adjustment may appear as a sharp fall in the stock price, though investors should not be concerned. The decline would be only notional, as the increase in the number of shares would proportionately offset the price adjustment, leaving shareholder value unchanged.

A bonus issue raises the number of shares outstanding, reduces free reserves and lowers earnings per share, leading to a proportionate recalibration of the stock price.

Bonus shares: How they will be funded

In the case of eClerx, 4,70,25,359 fresh equity shares of face value Rs 10 each will be issued out of retained earnings (free reserves), available as per the audited financial statements of the company for the financial year ended March 31, 2025, eClerx said on January 28 while proposing the issue.

“The bonus shares once allotted shall rank pari passu in all respects with the fully paid-up equity shares of the company and carry the same rights as the existing fully paid-up Equity Shares of the Company and not as an income or distribution in lieu of dividend,” the company had said earlier.

When will bonus shares be credited?

eClerx said the bonus shares will be credited to eligible shareholders within 60 days from the date of the board’s approval, that is, by March 27 at the latest.

Bonus vs stock split
While bonus issues and stock splits may appear similar, their underlying objectives differ. A bonus issue rewards shareholders by issuing additional shares from accumulated reserves without changing the face value of the stock. A stock split, on the other hand, divides existing shares into smaller units to enhance liquidity, resulting in a lower face value.

For instance, in a 1:3 stock split, each share is split into three, and the dividend per share adjusts accordingly. In the case of a bonus issue, however, the dividend entitlement per share does not change, as a shareholder’s proportional ownership in the company remains the same despite the higher share count.