Patanjali Foods Ltd. shares extended their rally on Wednesday ahead of a board decision on a bonus issue. The stock has jumped 8.4% in the last two sessions.
The board meeting is scheduled to be held on Thursday, July 17, to consider a proposal for issue of bonus shares subject to approval of the shareholders, a stock exchange filing said on Monday after market hours.
On Tuesday, Patanjali shares closed 4.2% higher. The share price has gone up for six consecutive session. If approved, this will be the Baba Ramdev-founded company's maiden bonus issue.
A bonus issue is the distribution of free shares to eligible shareholders. The share price falls in the ratio of the bonus allotment at the ex-date. However, this does not affect the overall value of holdings.
The stock has risen 16.7% in the last 12 months and 2% on a year-to-date basis. The total traded volume so far in the day stood at 5.3 times its 30-day average. The relative strength index was at 74, indicating the stock is overbought.
All four analysts tracking Patanjali Foods have a 'buy' rating on the stock, according to Bloomberg data. The average of 12-month analyst price target of Rs 2,101 implies a potential upside of 16%.
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