LKP Finance Announces 4:1 Bonus Issue After 408% Rally

Introduction

LKP Finance Limited, a non-banking financial company (NBFC), has announced significant corporate actions following a period of remarkable stock performance. On January 19, 2026, the company's Board of Directors approved the issuance of bonus shares in a 4:1 ratio. Alongside this, the board also approved a substantial increase in the company's authorized share capital to facilitate the bonus issue. These decisions come after the company's stock delivered a staggering 408% return to investors over the past twelve months.

Details of the Bonus Share Issue

The board has approved the issue of bonus equity shares in the proportion of four new fully paid-up equity shares for every one existing fully paid-up equity share held by eligible shareholders as of the record date. The new shares will have a face value of ₹10 each, identical to the existing shares. This move is intended to reward shareholders and improve the liquidity of the company's stock in the market. The bonus issue will be executed through the capitalization of the company's Securities Premium Account, a common practice for such corporate actions. The final issuance is contingent upon receiving approval from the company's shareholders.

Increase in Authorized Share Capital

To accommodate the new shares from the bonus issue, the Board of Directors has also approved a proposal to increase the authorized share capital of LKP Finance. The capital will be raised from ₹30 crore to ₹110 crore. An increase in authorized capital is a prerequisite for issuing new shares beyond the existing limit, ensuring the company has sufficient room in its capital structure for the bonus shares. This resolution, like the bonus issue itself, is subject to the approval of the shareholders at an upcoming general meeting.

Market Performance and Stock Activity

The announcement follows a period of exceptional performance for LKP Finance's stock, which has surged 408% over the last year. On the day of the announcement, January 19, 2026, the stock demonstrated continued investor interest. It was last trading on the BSE at ₹1096.40, up from the previous close of ₹1066.80. During the trading session, the stock reached an intraday high of ₹1120.00 and a low of ₹1050.00. A total of 7,362 shares were traded across 275 trades, resulting in a net turnover of ₹80,68,083.

Key Details of the Announcement

Here is a summary of the key corporate actions approved by the LKP Finance board:

Timeline and Next Steps

LKP Finance has provided a tentative timeline for the completion of the bonus issue process. The company anticipates that the bonus shares will be credited or dispatched to eligible shareholders by March 19, 2026. This timeline is dependent on obtaining the necessary approvals from shareholders and completing all regulatory formalities without delays. The company will announce the record date for determining shareholder eligibility for the bonus issue in due course.

Analysis of the Corporate Action

Issuing bonus shares is a strategic move often employed by companies with strong financial health and accumulated reserves. It increases the total number of shares in circulation, thereby enhancing liquidity and making the stock more affordable for retail investors. While a bonus issue does not change the fundamental valuation of a company, it is generally perceived positively by the market as a sign of management's confidence in the company's future prospects. The significant increase in authorized capital is a procedural necessity that signals the scale of the company's expansion of its equity base.

Conclusion

The decision by LKP Finance's board to issue 4:1 bonus shares and increase its authorized capital marks a significant development for the company and its shareholders. It serves as a reward for investors who have benefited from the stock's powerful rally over the past year. The next crucial step is securing shareholder approval for these proposals. Once approved, the actions are expected to enhance the stock's liquidity and broaden its investor base, potentially supporting its long-term growth trajectory.