Ashok Leyland's Dramatic Share Price Drop Explained

Investors were taken aback as Ashok Leyland shares experienced a sharp 51% decline, plummeting from Rs 250.85 to Rs 123.95. This sudden drop sparked concerns among the investment community.

However, the reality behind the numbers tells a different story. The decrease is attributed to a technical adjustment following the company's announcement of a 1:1 bonus share issue, which took effect on the same day.

Understanding the Bonus Share Impact

The stock began trading ex-bonus on July 16, after the company declared one bonus share for every existing share. This move effectively doubles the share count while maintaining the overall value of investor holdings unchanged.

July 16 was set as the record date for the bonus issue, ensuring eligibility for additional shares to investors holding shares at Tuesday's market close.

What This Means for Investors

Despite the apparent drop in share price, investor value remains intact. The total investment is unchanged, with the number of shares set to double once the bonus shares are credited to demat accounts on July 17, and trading begins on July 18.

Ashok Leyland's move reflects a strategic adjustment rather than a market downturn, offering a silver lining to its 14.2 lakh retail investors as of March 2025.