Good News: After Infosys, HCL Tech too considering bonus shares

Bengaluru, Jan 19: After announcing very impressive new year bonanza for its employees, now HCL Tech on Monday, Jan 19 said that it would "consider" a bonus issue at a meeting later in Jan 2015.

The IT major has taken the decision following the announcement by one of its biggest competitors Infosys which in 2014 announced a 1:1 bonus issue. Here it can be mentioned that HCL Tech had given bonus shares in the ratio of 1:1 in Mar 2007.

The board meeting of the IT company will be held on Jan 30, 2015. According to sources, board members would consider its Dec quarter earnings and payment of interim dividend for the year 2014-15.

In one of its statements to National Stock Exchange (NSE), HCL Tech said, "The company has now informed the exchange that at the aforesaid meeting board shall also consider the issuance of bonus shares to the equity shareholders of the company, subject to the approval of the shareholders."

What is a bonus issue?

A bonus issue and a stock split are different. In the case of a stock split, the face value of shares fall by half (or in whatever ratio the company decides to split). And in the case of bonus issue, the face value does not change.

Bonus shares are issued by a company when it feels confident about its future growth and hopes to meet investor's expectation of return on equity. Otherwise, companies prefer to give cash dividends rather than bonus issue of shares.

HCL to give Mercedez to top performers:

HCL Tech recently decided to reward 130 top performing employees with Mercedes cars or all-expenses-paid foreign holidays. Meanwhile, another IT giant TCS too announced 100 per cent variable allowance payout for employees. [Read: New Year Bonanza for HCL, TCS techies]

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