KVB bonus shares: First since 2018; key things to know as stock to turn ex-date on Aug 26

Ahead of its bonus shares on August 26, Karur Vysya Bank (KVB) settled at Rs 264 apiece on Monday. The private lender would turn ex-date for bonus issue in the ratio of 1:5 tomorrow. For every five fully paid-up equity share of Rs 2 each held by the eligible shareholders of the bank, investors would receive one share. The record date for identifying the eligible shareholders for the same would be August 27, Wednesday. 

This would be the fifth bonus issue by Karur Vysya Bank and the first since 2018. The stock had turned ex-date for 1:10 bonus issue on August 18, 2018. KVB turned ex-bonuses in 2010, 2006 and 2002 before. 

In a bonus issue, shareholders receive additional free shares in proportion to their existing holdings. In contrast, a stock split divides already held shares into smaller denominations without issuing new shares. For Karur Vysya Bank, the bonus issue would increase the number of outstanding equity shares while reducing its free reserves and surplus. Consequently, the earnings per share (EPS) and share ratio will come down, leading to an adjustment in the stock price. Along with KVB, HDFC Bank too will turn ex-date for 1:1 bonus issue. This would be HDFC Bank's first bonus shares.  

Analysts noted that Karur Vysya Bank’s June quarter earnings were in line with estimates on the back of healthy operating performance, supported by strong fee income traction and stable margins. HDFC Institutional Equities noted that healthy loan growth (16 per cent YoY) was driven by retail, agri, and MSME segments, while the corporate portfolio continued to degrow, given the bank’s strategy to shed margin-dilutive businesses (corporate loans). 

"Deposit growth hugged loan growth (+16 per cent+ YoY) as the CASA ratio clocked in at 27.5 per cent (+21bps QoQ). We tweak our FY26E/FY27E estimates, factoring in a 18bps NIM compression (earlier: 15bps) and softer credit costs for FY26E (70bps). We remain constructive on KVB, given its consistent operational performance, a granular portfolio, and strong asset quality outcomes," it said.