Explained: Why Easy Trip Planners’ shares surged 20% today

NEW DELHI: Shares of Easy Trip Planners, which operates EaseMyTrip.com, jumped 20 per cent to Rs 57.15 on the BSE in Monday’s intra-day trade after they turned ex-date for 3:1 bonus issue, and 1:1 stock split.
At noon, the stock was up 18.83% at Rs 56.90.
The company’s board on October 10, 2022, had approved sub-division/split of each existing equity share of face value of Rs 2 into 2 equity shares of face value of Rs 1. The board also approved issue of 3 bonus equity shares for every 1 share held in the company.
Stock Split as the name suggests means splitting the face value of the shares of a company. Primarily, a company splits its stocks to improve its liquidity in the markets and to make its stock seem more affordable to retail investors. Stock splits don’t actually change the value of one’s stock holdings, but multiply one’s shares and divide the share price.
A stock split increases the number of shares outstanding and lowers the individual value of each share. While the number of shares outstanding change, the overall market capitalization of the company and the value of each shareholder’s stake remains the same.
The split divides the existing number of shares into more shares. There is no change in ownership but the absolute value of shares decreases. So for every 1 share held by shareholders of Ease Trip Planners would become 2 shares.
“Whenever a company wants to increase its number of shares in the market without increasing its market cap, it opts for a stock split. Further, it is generally done in order to infuse liquidity, thereby making the shares affordable for various investors in the market,” said Sameer Jain, Managing Partner, PSL Advocates & Solicitors.
The company also announced the issue of Bonus Equity Shares of the Company in the proportion of (Three) Equity Share of ₹1/- each for every (One) existing Equity Share of Rs 1/- each. It means that Easy Trip Planners will give 3 bonus shares for every 1 share held.
This is for the second time in 2022 when EaseMyTrip shares are trading ex-bonus. In February 2022, EaseMyTrip shares had traded ex-bonus for issuance of 1:1 bonus shares. Bonus shares would be issued out of reserves and surplus worth Rs 192 crore as on March 31.
Bonus share is the issue of share by the company free of cost to existing shareholders. “The benefits of issuing bonus shares are twofold. Firstly, it gives the existing shareholders a chance to widen their equity holding in a company. Secondly, instances when the share prices of a company become too high for a retail investor to purchase, the increase in number of shares reduces the price per share without any alterations in the overall capital holding,” said Sameer Jain, Managing Partner, PSL Advocates & Solicitors.
“Bonus is different from stock split because it is one of the ways for a company to reward its investors by offering more shares of the Company. It is beneficial for the shareholders of a company as they get additional shares without paying any consideration. Practically, grant of bonus shares is like payment of dividend to the shareholders in kind,” said Hemang Parekh, Partner, DSK Legal.
EaseMyTrip is one of India’s largest online travel platforms in terms of air ticket bookings. It posted Quarterly Gross Booking Revenue (GBR) of Rs 1,977.7 crore in the second quarter of FY23, its highest-ever in any quarter.
Revenue from Operations was Rs 108.5 crore in the second quarter of FY23 compared to Rs 56.7 crore in the corresponding quarter of the previous fiscal, a growth of 91.5 per cent year-on year.