2d76a864_ck_Dividends__Capital_Market____s_it_to_be_wise_after_the_show
[The Convention] Buy companies that announce bonus issues and splits [The Exception] Mphasis BFL, Mastek are companies that give frequent bonuses and splits. Still these companies have lagged behind the sector leaders.
A bonus or a split has no effect on market price. A bonus or a stock split can be viewed in the same analogy as cutting a pizza into smaller pieces of equal size. This means that the quantity of the pizza as a whole remains unaltered. A bonus reduces the EPS of a company by exactly the same proportion that the number of shares are increased, the RoE and RoCE remain constant after the bonus issue.
Stock analysis, Share Market India, Stock Dividends, Capital Market..
Reason for this exception – How easy is it to be wise after the show