Corporate Action Update – Samvardhana Motherson International Ltd Bonus Issue
Samvardhana Motherson International Ltd. has announced a bonus issue in the ratio of 1:2, i.e., 1 bonus share for every 2 shares held.
Equity Segment Details
- Bonus Ratio: 1:2 (1 bonus share for every 2 held)
- Face Value: ₹1 per share (unchanged)
- Record Date: Friday, July 18, 2025
What This Means for You
If you hold 200 shares of Samvardhana Motherson on the record date, you will receive 100 bonus shares at 0 rate.
These shares will be credited to your demat account typically within 3 business days from the record date. Once credited, your Neo Portfolio will automatically reflect the updated quantity and investment value.
You will be able to sell the bonus shares once they are credited to your demat account.
Temporary Impact on Portfolio Value
After the record date:
- The market price of Samvardhana Motherson shares will adjust to roughly 1/1.5 (or ~ 67%) of the pre-bonus price.
- This may cause your investment value to appear lower (approx. 33% drop) temporarily.
- Don't worry — this is only until the bonus shares are credited.
Once the bonus shares reflect in your Portfolio and Demat account, the total investment value will normalize.
Understanding F&O Adjustments in Neo Portfolio – Samvardhana Motherson Bonus Example
When a company announces a corporate action like a bonus, it impacts not just your equity holdings but also your Futures & Options (F&O) positions. If you're wondering why your Unrealized Profit & Loss (P&L) looks inflated or incorrect after such an event, you're not alone.
Here’s a real-world example using Samvardhana Motherson to explain how this works and how we manage it on the Kotak Neo platform.
What Happened?
Samvardhana Motherson declared a bonus issue in a 1:2 ratio. That means for every 2 shares you hold, you get 1 bonus share. In the F&O segment, this leads to changes in:
- Lot size
- Strike price
- Contract value
These adjustments are mandated by the exchange and are carried out automatically.
How We Handle This in Neo
Whenever a corporate action occurs, your F&O position undergoes two automatic adjustments:
- Knock-off the old position
We close your existing position with a Buy/Sell entry at zero cost, which books your profit/loss till that point. - Re-enter the adjusted position
A new position is added based on the revised lot size or strike price, also at zero cost.
This ensures your position aligns with the new contract without impacting your actual gains.
Why Does My Unrealized P&L Look Wrong?
Let’s break it down using a real example 👇
Unrealized P&L Matches live market price
After Bonus Adjustment (1:2) Adjustment Factor: (2+1)/2 = 1.5
| Action | Quantity | Strike | Price | Amount |
|---|---|---|---|---|
Adjustment BUY (nullify) | 800 | 1200 | ₹0 | ₹3,600 Profit Booked |
Adjustment SELL (re-enter) | 1200 | 800 | ₹0 | Unrealized P&L starts fresh |
Now, if the LTP (Live Trading Price) is ₹3.00, your Unrealized P&L will show:
₹3.00 × 1200 = ₹3,600 (Unrealized Profit)
This may look inflated as your cost price is set to zero (for technical accounting reasons). But don’t worry—it’s only temporary.
After You Close the Position
Let’s say you BUY back the 500 CE at ₹2.00:
| Action | Quantity | Price | Amount |
|---|---|---|---|
Square off Position | 1200 | ₹2 | ₹2,400 |
Final Realized P&L | ₹1,200 (₹3,600 - ₹2,400) |
Your actual P&L is correct and adjusted automatically.
What You Should Know:
- Unrealized P&L may look unusual right after the bonus adjustment.
- Final P&L is always accurate once the trade is closed.
- You don’t need to take any action – adjustments are automated and fully compliant with exchange rules.
- Full transparency – You can view all entries in your transaction history & contract note.