Shares of Samvardhana Motherson International Ltd. plunged nearly 33% to ₹103.35 on Friday, but the steep drop is not a reflection of the company’s fundamentals — it’s due to an adjustment for its bonus issue of shares.
The auto components supplier’s stock began trading ex-bonus today, July 18, following its previously announced 1:2 bonus issue. The company had announced the bonus shares alongside its Q4 results in May 2025. Under this plan, shareholders who held the stock as of Thursday’s close will receive one bonus share for every two shares held.
For instance, an investor holding 100 shares will now hold 150 shares post-bonus, with the stock price adjusted proportionally. This corporate action explains the sharp decline in the stock price, as the market cap remains effectively the same after the bonus.
Samvardhana Motherson is notable for its frequent shareholder-friendly actions. This is the 11th bonus issue in the last three decades, with previous issuances recorded in 1997, 2000, 2005, 2007, 2012, 2013, 2015, 2017, 2018, and 2022 — each in the same 1:2 ratio.
While the stock price shows a large percentage drop today, it is purely a technical adjustment due to the bonus shares being accounted for, and not a reflection of poor financial performance or negative news.
Investors should note that the value of their investment remains unchanged post-adjustment, as they now hold more shares at a lower price per share.
