Hindustan Petroleum (HPCL) Sets Record Date for Bonus Shares Distribution: Key Details Inside

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  <li>Hindustan Petroleum Corporation Ltd (HPCL) has set Friday, June 21, as the record date to determine shareholders eligible for the issuance of bonus shares in a 1:2 ratio, the Maharatna oil major announced on May 27.</li>
  <li>HPCL is preparing to issue bonus shares for the third time in seven years.</li>
  <li>"The Board of the Company has recommended issue of bonus shares in the ratio 1:2 i.e., one bonus equity share of ₹10 each for every two existing equity shares of ₹10 each fully paid up to the Members of the Company as on the Record Date i.e. Friday, 21' June 2024, subject to the approval of the shareholders through the process of Postal Ballot (e-Voting) administered by CDSL," the company said in an exchange filing.</li>
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<p><strong>HPCL announces record date for bonus shares; check details</strong></p>
<h2><strong>HPCL's Strategic Move: Bonus Shares Issuance</strong></h2>
<p>Hindustan Petroleum Corporation Ltd (HPCL) has set June 21 as the record date for determining shareholders eligible for the issuance of bonus shares in a 1:2 ratio. This announcement, made on May 27, marks the third time in seven years that HPCL is issuing bonus shares. The company's board has recommended issuing one bonus equity share of ₹10 each for every two existing equity shares of ₹10 each, subject to shareholder approval through a Postal Ballot (e-Voting) process administered by CDSL.</p>
<h3><strong>Historical Context and Strategic Implications</strong></h3>
<p>HPCL's decision to issue bonus shares is part of a broader strategy to leverage its free reserves, enhance its Earnings Per Share (EPS), increase paid-up capital, and reduce reserves. This move follows previous bonus issues in 2016 and 2017, where the company distributed shares at a 2:1 and 1:2 ratio, respectively. The issuance of bonus shares is a strategic tool used by companies to reward shareholders without impacting cash reserves, thereby increasing shareholder value and market liquidity.</p>
<h2><strong>Financial Performance and Market Reaction</strong></h2>
<p>On May 9, HPCL reported a 25% year-over-year decline in its consolidated net profit for Q4 FY24, amounting to ₹2,709 crore. This decline was attributed to lower refining margins and increased costs. However, the company reported significant sequential profit growth, surpassing market expectations. The reduction in petrol and diesel retail prices by ₹2 per litre, effective from March 15, also influenced earnings, albeit to a lesser extent.</p>
<h3><strong>Market Performance and Shareholder Impact</strong></h3>
<p>The shares of HPCL ended Monday's trading session in the green, up 2.31% higher. The stock closed at ₹556 per share on May 27, against the previous close of ₹543.35 on Friday last week. Investors looking to qualify for HPCL's bonus shares must purchase the stock before the ex-date, as shares bought on or after this date will not be eligible for the bonus shares.</p>
<h3><strong>Conclusion</strong></h3>
<p>HPCL's announcement of bonus shares issuance is a strategic move aimed at rewarding shareholders and enhancing market liquidity. Despite a year-over-year decline in net profit, the company's sequential profit growth and market performance indicate a positive outlook. Investors should consider the ex-date to qualify for the bonus shares and monitor HPCL's financial performance for future investment decisions.</p>