State PSUs have been told to issue bonus shares to their shareholders if their defined reserve and surplus is equal to or more than 10 times their paid-up equity share capital.
Shares of Gujarat-based state public sector undertakings (PSUs) rallied on Wednesday after the Gujarat government laid out minimum requirements for dividends, bonus shares, buybacks, and stock splits for these firms.
Stocks of almost all the Gujarat government-owned companies surged 7-15 percent in the opening trade on Wednesday.
In a new policy announced on Tuesday, the Gujarat government said that it was mandatory for state PSUs to pay a minimum dividend of at least 30 percent of profit after tax (PAT) or 5 percent of net worth, whichever is higher, to its shareholders.
For the buyback of shares, every state PSU having a net worth of at least Rs 2,000 crore along with cash and bank balance of Rs 1,000 crore have been mandated to exercise the option to buyback their own shares.
Also, state PSUs have been told to issue bonus shares to their shareholders if their defined reserve and surplus is equal to or more than 10 times their paid-up equity share capital.
The Gujarat government has also mandated splitting of shares where the market price or book value of state PSUs’ shares exceeds 50 times their value, provided the existing face value of a share is more than Re 1.
The state government on Tuesday said that the new policy of compulsory dividends and bonus shares will add to the valuation of Gujarat state PSUs.