What Is a Bonus Issue? 📜

A bonus issue is when a company gives additional shares to its existing shareholders for free by capitalizing its reserves. In HDFC Bank’s case, the 1:1 bonus issue means you get one extra share for every share you own. The stock price adjusts proportionally (halving in this case), so your total holding value stays the same on the ex-date. Think of it like splitting a pizza into more slices—same pizza, just more pieces! 🍕

HDFC Bank’s Bonus Issue Details 🏦

This is HDFC Bank’s first-ever 1:1 bonus issue, with the ex-date set for late August 2025. The share price adjusted to reflect the doubled share count, and eligibility was determined by the record date in the same week, following India’s T+1 settlement rules. Brokers reported that bonus shares were credited to demat accounts around August 29, 2025. During this period, you might have noticed temporary profit-and-loss (P&L) distortions in your portfolio until the shares were credited. Margin positions also faced brief trading restrictions during this window. 🕒

Reward or Risk? ⚖️

At its core, a bonus issue doesn’t create or destroy value—it’s neutral. It increases the number of shares in circulation (float), which can improve liquidity and attract more retail investors. However, the real value of your investment depends on HDFC Bank’s future earnings, return on equity (ROE), and overall performance, not the bonus itself. Recent quarterly results showed double-digit profit growth, which supports a positive outlook, even though the stock dipped slightly when it began trading ex-bonus. 📊

Share Price Outlook 🔍

The immediate aftermath of a bonus issue often brings price volatility as the market adjusts to the new share count and increased retail interest. HDFC Bank saw some intraday dips post-ex-date, despite its strong fundamentals. Looking ahead, the stock’s performance will depend on factors like credit growth, profit margins, asset quality, and synergies from its merger with HDFC Ltd. The bonus may broaden ownership and improve liquidity, which could lead to better price discovery over time. 🚀

Income Tax Rules 🧾

Receiving bonus shares doesn’t trigger income tax at the time of allotment. In India, bonus shares are treated as a capitalization of reserves, not as “income from other sources.” Tax comes into play only when you sell the shares. For capital gains, the cost of acquisition for bonus shares is considered nil, and the holding period starts from the allotment date. This applies to both original and bonus shares, which are tracked separately for tax purposes. 🧮

Mechanics Around Record and Ex-Date 📅

To be eligible for the bonus, you needed to be a shareholder on the record date, which typically means buying shares at least one trading day earlier due to T+1 settlement. On the ex-date, the share price halved, and your portfolio might have shown temporary P&L fluctuations until the bonus shares were credited. If you had shares pledged for margin, there might have been a short restriction period until the bonus shares were reflected in your collateral. ⏳

Real-Life Example: Meera’s Story 💡

Let’s say Meera owned 100 HDFC Bank shares at ₹1,964 each before the ex-date, with a total holding value of ₹196,400. After the 1:1 bonus, she held 200 shares at roughly ₹982 each, keeping her total value at ₹196,400. Later, if Meera sells her 100 bonus shares at ₹1,050 each, her capital gains for that lot would be calculated with a nil cost basis, so:

100 × (₹1,050 − ₹0) = ₹105,000

The holding period for the bonus shares starts from the allotment date, while her original shares retain their original purchase cost and acquisition date for tax purposes. 📋

Key Investor Touchpoints 📑

Practical Takeaways 🛠️

The bonus issue itself doesn’t change your investment’s value—it’s like rearranging deck chairs. Focus on HDFC Bank’s fundamentals, like earnings growth and asset quality, when deciding whether to hold or buy more. For tax and compliance, keep track of the separate cost basis and acquisition dates for your original and bonus shares. Be prepared for temporary portfolio distortions until the bonus shares are credited to your demat account. ✅

Frequently Asked Questions ❓