Tech Mahindra’s board recommended a 1:1 bonus issue on Oct. 15, as the company reported quarterly profit growth of 32.7%, pairing a shareholder distribution plan with stronger year-over-year results.
The ratio means eligible shareholders would receive new fully paid shares equal in number to their current holdings, each with a ₹5 face value. The proposal still requires shareholder approval by postal ballot. Tech Mahindra said it would announce the bonus record date separately.
The company estimates an issue of about 980.2 million shares, with an aggregate face value of about ₹4.9 billion. The final number will depend on paid-up share capital on the record date. Potential sources for the capitalization include the Securities Premium Account, General Reserves, Retained Earnings and other permitted reserves. Eligible holders would receive the shares without paying for them. The board also proposed raising authorized share capital from ₹9.243 billion to ₹10 billion.
The Bombay Stock Exchange (BSE) guide assigns a factor of two when adjusting reference prices for a 1:1 bonus. With twice as many shares, the post-bonus reference price is set at half the previous level. Before other market movements, that adjustment leaves the holding’s arithmetic value unchanged; the bonus alone does not create an equivalent gain in value.
Tech Mahindra’s investor presentation linked the proposal to its 40th anniversary. The company has made a similar capital move before: its FY2014-15 annual report records that shareholders approved a 1:1 bonus and a share subdivision on March 10, 2015, reducing the face value from ₹10 to ₹5.
For the quarter ended Sept. 30, consolidated revenue reached ₹161.8 billion, up 15.6% year over year, and profit after tax rose to ₹15.86 billion, a 32.7% increase. Revenue in U.S. dollar terms was $1.693 billion, up 6.8% as reported and 7.2% in constant currency. New deal wins had total contract value of $1.023 billion, up 25.4% from a year earlier.
Separately, the board declared an interim dividend of ₹15 per share, with a record date of Friday, Oct. 23, and payment due by Nov. 13. Those dates apply to the dividend, not the proposed bonus. The bonus now awaits consideration by shareholders through a postal ballot.
