Newgen Software announces bonus share issue at 1:1 ratio

Bengaluru, 27 November: IT services firm, Newgen Software on Monday announced that its board has approved a bonus issue of 1 share for every 1 share held by shareholders.

In an exchange filing, the company’s board has also approved the increase in the authorised share capital of the company from Rs 110.10 crore to Rs 180.10 crore.

This is the first such bonus issue of shares by the company. “Recommended the issue of Bonus shares in the proportion of 1:1 i.e. 1 (One) new fully paid-up bonus equity share of Rs 10 each for every 1 existing fully paid-up equity share of Rs 10 each held by the members of the company as on the record Date," the company said in an exchange filing.

Bonus shares are usually issued by any company to encourage retail participation and increase the equity base. Under this process, additional shares are issued to its existing shareholders at a specified ratio. For instance, a 1:1 ratio means a shareholder will receive one share for every share she or he currently owns under a 1:1 bonus. So, if a person has 5 shares, she or he will receive 5 more. These shares are not purchased by the stockholders at any cost.

Newgen Software has provided superior returns to investors in recent years. The stock has given multibagger returns both in the last one year as well as in 2023 YTD (year to date). It soared 270 percent in the last one year and 250 percent in 2023 till date.

During September quarter, the company's net profit jumped 59 percent year-on-year (YoY) to Rs 48 crore. Meanwhile, its revenue from operations rose 29.7 percent to Rs 293 crore during this period.

Though IT index has been under pressure for the last two quarters, select mid-cap stocks are outperforming the index.