Shares of Kitex Garments Limited surged by 5% on Tuesday, November 19, hitting the upper circuit at ₹635.30.
The rise is attributed to the company’s announcement about issuing bonus shares, a move that comes after seven years.
The last bonus issue by Kitex Garments was in 2017, with a 2:5 ratio, meaning shareholders received two additional shares for every five they held.
Board Meeting to Finalize Bonus Shares
The company notified stock exchanges on Monday about its plan to issue bonus shares.
The board of directors is scheduled to meet on Friday, November 22, to discuss and finalize the proposal. Shareholders are keenly awaiting the outcome of this meeting.
Understanding Bonus Shares
Bonus shares are free shares given to existing shareholders without any additional cost. Companies use them to capitalize on reserves, enhance earnings per share (EPS),
and increase paid-up capital. These shares attract retail investors by making the stock more affordable when its price rises significantly.
However, only investors who buy the stock before the ex-date will qualify for these bonus shares.
Kitex Shares Under Surveillance Framework
Kitex Garments’ shares are currently in Phase 1 of the Additional Surveillance Measure (ASM) framework. This phase imposes certain restrictions:
1) A 100% margin is required for trading.
2) The stock is limited to a daily price band of 5%.
3) Intraday and leveraged trading are not allowed.
To exit the ASM framework, the stock must meet specific criteria for 5–15 trading sessions.
Despite these restrictions, Kitex Garments has shown exceptional performance this year, with its stock price nearly tripling in 2024 and delivering a 183% year-to-date gain.
