Farm Peace bonus issue reset 2024 effective share costs

Farm Peace’s August 25, 2025 bonus issue reset the effective per-share cost of its 2024 preferential allotments because three new shares were issued for every one held. On a four-share post-bonus basis, the Rs 222 June 2024 allotment equates to Rs 55.50 per share and the Rs 150 allotments equate to Rs 37.50.

How did Farm Peace’s bonus issue reset 2024 effective share costs?

Farm Peace’s 3-for-1 bonus issue reduced the effective per-share acquisition cost of pre-bonus shares by 75% because each existing share became four shares in total. The company allotted 1,13,66,472 equity shares on August 25, 2025 at nil consideration, increasing cumulative equity shares from 37,88,824 to 1,51,55,296.

A bonus issue is an allotment of additional shares to existing holders without cash consideration for those additional shares. Farm Peace’s stated ratio was three new equity shares for every one equity share held, meaning that 100 shares before the bonus issue would correspond to 400 shares after it. The original cash paid for the pre-bonus shares does not change, but that cash is allocated across four shares for an effective-cost comparison.

The calculation is mechanical rather than a statement of each original allottee’s present holding. Farm Peace’s capital-history disclosure identifies the allotment ratio and date, but it does not set out the current holdings of every investor who received preferential shares during 2024. A holder’s individual position would depend on the shares held when the bonus entitlement was applied and on any subsequent transactions.

Which Farm Peace preferential allotments were affected by the bonus issue?

Farm Peace made five preferential allotments in 2024, including one at Rs 222 per share and four at Rs 150 per share. The June 1, 2024 allotment comprised 1,68,824 equity shares at Rs 222, while the November 11, November 21, December 4 and December 27 allotments together comprised 11,00,000 equity shares at Rs 150.

The four Rs 150 allotments represented 86.69% of the 12,68,824 shares issued through the five 2024 preferential issues, based on the disclosed allotment quantities. The June 2024 allotment represented the remaining 13.31%, but carried the higher original issue price of Rs 222. After applying the 3-for-1 ratio, the June allotment corresponds to 6,75,296 shares and the four later allotments correspond to 44,00,000 shares.

The preferential issues also changed Farm Peace’s equity base before the bonus issue. Cumulative equity shares rose from 25,20,000 after the December 13, 2022 rights issue to 26,88,824 after the June 2024 allotment, then reached 37,88,824 after the December 27, 2024 allotment. The August 2025 bonus issue was therefore applied to a share capital that already included all five 2024 preferential allotments.

Why are the original issue prices not directly comparable after August 2025?

Farm Peace’s original preferential issue prices remain the historical prices paid, but they do not measure the cost of one post-bonus share. A share issued at Rs 222 in June 2024 became one of four shares after the August 25, 2025 bonus issue, resulting in Rs 55.50 of effective cost per share. A Rs 150 share issued in the four later 2024 allotments similarly becomes four shares at an effective cost of Rs 37.50 each.

The distinction is between original issue price and effective cost after a corporate action. Original issue price refers to the cash price for one share at the allotment date, while effective cost divides that same cash outlay across the larger number of shares created by the bonus issue. Farm Peace disclosed a face value of Rs 10 per equity share, but the Rs 222 and Rs 150 preferential issue prices are the relevant acquisition prices stated in its share-capital history.

Farm Peace stated that all its equity shares were fully paid-up as of the prospectus date and that it had only one class of share capital. The company also disclosed no outstanding convertible instruments as of that date. Those disclosures make the stated four-share adjustment direct for the equity shares covered by the 3-for-1 bonus ratio, without a separate conversion or share-class calculation.

How large was the Farm Peace bonus issue within its capital history?

Farm Peace’s August 2025 bonus issue was substantially larger than its combined 2024 preferential allotments in share-count terms. The bonus issue added 1,13,66,472 shares, compared with 12,68,824 shares across the five 2024 preferential issues, and increased the share count by exactly 1,13,66,472 shares from 37,88,824 to 1,51,55,296.

The board approved the bonus issue on July 24, 2025 and shareholders approved it on August 18, 2025, before the August 25 allotment. Farm Peace said the issue was undertaken by capitalising reserves and surplus of Rs 1,163.6646 crore. The company also stated that the bonus issue did not involve shares issued out of revaluation reserves.

Farm Peace described the benefit of the August 2025 bonus issue as expansion of its capital base. The issue was made at nil consideration, so it did not represent a new cash payment by shareholders for the 1,13,66,472 bonus shares. That differs from the 2024 preferential allotments, which were expressly recorded as cash allotments at Rs 222 or Rs 150 per share.

What does Farm Peace’s proposed share issue change after the bonus issue?

Farm Peace’s proposed issue would add 54,24,000 equity shares and increase paid-up equity capital from 1,51,55,296 shares before the issue to 2,05,79,296 shares after it, assuming full subscription. The proposed shares equal 35.79% of the pre-issue share count, so ownership percentages would change even though the effective cost calculation for pre-bonus shares remains based on the August 2025 ratio.

The proposed issue includes 2,72,000 shares reserved for the market maker and a net issue to the public of 51,52,000 shares. Farm Peace disclosed that the market-maker reservation represents 5.01% of the 54,24,000 shares in the proposed issue. The company’s stated post-issue capital structure therefore separates the fresh issue from the prior bonus issue, which added shares without cash consideration.

Farm Peace’s promoters held 79,40,000 shares, equal to 52.39% of pre-issue paid-up equity capital, as of the prospectus date. The same 79,40,000 shares would equal 38.58% of post-issue capital after the proposed issue. This comparison shows the difference between the proportionate August 2025 bonus allotment and a fresh issue that expands the capital base with additional shares.

Conclusion

Farm Peace’s August 25, 2025 3-for-1 bonus issue changed the per-share basis used to assess its 2024 preferential allotments. The June 2024 Rs 222 issue price becomes Rs 55.50 across four resulting shares, while the Rs 150 prices used in four later 2024 allotments become Rs 37.50. The aggregate historical cash paid for the original shares is not altered by that calculation.

The next disclosed capital-structure change to watch is the proposed addition of 54,24,000 equity shares, which would take Farm Peace’s paid-up equity shares to 2,05,79,296 assuming full subscription. Farm Peace also disclosed that at least 20.00% of post-issue equity capital held by promoters will constitute minimum promoter contribution and be locked in for three years from allotment under the stated Securities and Exchange Board of India regulations.