Corporate actions and what they mean

Corporate actions affect share price and ownership in defined ways. Bonus: free additional shares, no economic change. Stock split: each share divided into smaller units, no economic change. Buyback: company repurchases shares, returns capital to shareholders. Dividend: cash distribution. Rights issue, QIP, FPO: company issues new shares to raise capital — dilutive unless investor participates.

Bonus 1:1 doubles share count, halves price; ratio (P/E, EPS, etc.) unchanged. Stock split similar. Buybacks: tender offer (proportionate participation, premium to market) vs open-market (company buys at market). Tender offers above 25% of market price are tax-efficient (no STT, deemed buy-back tax). Dividends: ex-date is the trade-cum-rights cutoff. Rights issue: existing shareholders get "rights" to buy new shares at a discount (e.g., 1:5 at 30% discount). Renunciation possible — sell the rights to others. QIPs (Qualified Institutional Placements) and FPOs (Follow-on Public Offerings) raise capital from institutions; existing retail investors are diluted unless they participate.

A nuance: bonus issues and stock splits don't add value directly — they're cosmetic. But they often signal management confidence and improve trading liquidity, leading to small post-action rallies. Buybacks are more substantive: they reduce share count, boost EPS, and often signal undervaluation. Promoter pledges around corporate actions are a red flag — high pledge + buyback can be a signal that promoters need cash to relieve pledged shares. Always check the SHP (shareholding pattern) post-action.