2 Good Quality Stocks To Buy In JUNE [ 2023 ]- TeknikalRaman

Good quality stocks to buy

Indian Oil Corporation is a public company based in India.

A bonus of 1:2 has been declared by the corporation. This means that if you possess 100 shares, you will receive an additional 50 bonus shares. The company’s shares will go ex bonus on June 30, 2022, with a record date of July 1, 2022.

For the financial year 2021-22, the business has also declared a final dividend of Rs 3.60 per equity share (pre-bonus), which translates to Rs 2.40 per equity share post-bonus. As a result, the stock is a smart option not only in terms of bonus shares, but also in terms of dividends.

Based on last year’s payouts of Rs 11.4 per share, the stock has a dividend yield of about 9% at its current market price. The company’s primary concern at the moment is rising petroleum prices. Even when demand was down owing to covid, the company was able to keep its payouts.

Financial performance of the IOC

BSE Code:	530965
NSE Code:	IOC

On a year-over-year (YoY) basis, the company’s standalone net profit fell 31.4 percent to Rs 6,022 crore in Q4FY22, owing to a margin squeeze in petrochemicals and losses on vehicle fuel sales. It’s worth noting that the company’s performance was harmed in part because it didn’t raise gasoline and diesel prices in crucial states due to elections. This had an effect on profits.

Some brokerage firms have continued to be bullish on IOC shares and have urged that investors buy the stock. “In FY23-24, we anticipate a dividend distribution of 51 percent. IOCL is currently trading at 7.5x FY24E consolidated EPS and 0.8x FY24E P/BV. It is the most likely among its peers to profit from an increase in refining margin, which will be bolstered in the near term by a strong petchem margin.

To get at our target price of Rs 164, we value the stock at 1x FY24E P/BV, implying a 32 percent upside. We keep our Buy recommendation “Motilal Oswal, a brokerage business, has stated.

PROS

Stock is trading at 0.82 times its book value
Stock is providing a good dividend yield of 10.34%.
Company is expected to give good quarter

CONS

The company has delivered a poor sales growth of 10.65% over past five years.
Company might be capitalizing the interest cost

Varun Beverages is another stock that has a bonus share issue.

Varun Beverages, like India Oil, has announced a bonus issue of shares in the ratio of 1:2. The corporation has set June 7 as the record date for the ex bonus, with June 6 as the ex date.

This means that if you want to take advantage of the bonus issue, you must purchase the stock by the end of the trading day on June 5. CRISIL Ratings has raised the company’s long-term bank facilities rating.

The rating has been upgraded to ‘CRISIL AA+’ from ‘CRISIL AA,’ and the outlook has been changed to ‘Stable’ from ‘Positive.’ Varun Beverages Limited is a major player in the beverage business and one of PepsiCo’s largest franchisees worldwide (outside USA).

BSE Code:	540180
NSE Code:	VBL

PROS

Company is expected to give good quarter
Company has delivered good profit growth of 72.11% CAGR over last 5 years
Company has been maintaining a healthy dividend payout of 17.64%

CONS

Stock is trading at 11.21 times its book value
Company might be capitalizing the interest cost
Promoter holding has decreased over last 3 years: -8.67%

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Some Frequently Asked Questions On Stock Bonus

Q1: What happens during stock bonus?

A1: The bonus issue is the stock dividend, which is allocated by the company to reward shareholders. Bonus shares are issued from the company’s reserves. These are free shares that shareholders receive against the shares they currently hold. These allocations usually come in fixed ratios such as 1: 1, 2: 1, 3: 1.

Q2 Is it good to buy bonus shares?

A2: Bonus stocks give the market a positive signal that the company is committed to a long-term growth story. Bonus stocks increase the outstanding stock, which increases the cash flow of the stock. Perception of the size of the company increases with the increase in the share capital issued.

Q3 How is bonus share calculated?

A3: Suppose a shareholder owns 2,000 shares of the company, and now when the company issues bonus shares, he receives 1,000 bonus shares (2,000 * ½ = 1,000).

Q4 Can I sell bonus shares?

A4: Shareholders can sell bonus shares and meet their cash flow requirements. Bonus shares may also be issued to restructure company balances. There will be no cash flow in issuing bonus shares. It increases the share capital of the company but not its net assets.

Q5 Why do companies give bonus shares?

A5: Companies issue bonus shares to promote retail participation and increase their share base. When the share price of a company is high, it is difficult for new investors to buy shares of that particular company. An increase in the number of shares reduces the price of a share.

Q6 Who is eligible for bonus shares?

A6: All shareholders who are before the registration date and the previous date are eligible to receive bonus shares. India follows a T + 2 rolling system for the delivery of shares. Therefore, to qualify for bonus shares, you must purchase shares before the due date.

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