How NEPSE adjusts the price for bonus and right shares
A bonus or right issue does not change what the company is worth at the moment it happens; it spreads that worth over more shares. So on the book closure the price is adjusted down, by the usual formula:
Adjusted price = (Price + Right % × Issue price) ÷ (1 + Bonus % + Right %)
Bonus share example
A share at Rs 550 with a 10% bonus adjusts to 550 ÷ 1.10 = Rs 500. If you held 100 shares worth Rs 55,000, you now hold 110 shares worth the same Rs 55,000. The bonus is not income until you sell, and bonus shares come in at no cost, which lowers your WACC.
Right share example
A share at Rs 400 with a 1:1 right issue at Rs 100 adjusts to (400 + 100) ÷ 2 = Rs 250. Each right is worth about Rs 250 − Rs 100 = Rs 150. If you do not apply for your rights, that value is left behind and your holding is diluted.
After the adjustment the market can still open anywhere inside the day's price band, so the adjusted price is where trading starts from, not where it ends.
Questions people ask
How do I calculate the share price after a bonus share?
Divide the price before the book closure by one plus the bonus fraction. A 20% bonus on a Rs 600 share gives 600 ÷ 1.2 = Rs 500.
How is the price adjusted after a right share issue?
Add the right fraction times the issue price to the market price, then divide by one plus the right fraction. A 1:1 right at Rs 100 on a Rs 400 share gives (400 + 100) ÷ 2 = Rs 250.
Do I lose money when the price drops after a bonus?
No. You own more shares at the lower price, so the value of the holding is the same just after the adjustment.
What does a 10:3 right share ratio mean?
Three new shares may be bought for every ten held, which is a 30% right issue.
When must I buy to get the bonus or right shares?
Your shares must be settled in your demat account before the book closure date. With T+2 settlement that means buying at least two trading days before it, more when holidays fall in between.
Keep your whole portfolio this way
Lagani works these sums out for every trade you make: your real WACC with charges, capital gains tax by holding period, dividends, and your return against the NEPSE index. Import your MeroShare or TMS history in a minute.
Request accessArithmetic on the figures you enter, at the published rates. Not financial advice; check figures against your broker's bill and the exchange's notices.
