The company's board is meeting on May 19 to take up the bonus issue. Leading Edge is also planning to place around five per cent of its equity on a preferential-allotment basis under the employee stock option plan (ESOP).

A relatively unknown company till a year ago, Leading Edge shot into the limelight when its scrip caught investors' fancy. Since then, the stock has been on a continuous upward journey and zoomed to over Rs 900 from less than Rs 100 in less than a year.

Leading Edge seems to have taken a cue from multinational companies (MNCs) which are very liberal in rewarding shareholders with frequent bonus issues. In fact, a few infotech firms have also adopted the bonus route to reward their shareholders, and unlike others, thedilution of their equity did not affect the stock price.

Companies like Infosys Technology, Aptech, Wipro and NIIT have in the past rewarded their shareholders by way of liberal bonuses, yet their stocks are trading at astonishing levels of over Rs 1,000. Take the case of Infosys Technology. The company announced a 1:1 bonus and its shares, after the company's excellent performance, have once again climbed back to their ex-bonus level of Rs 2,300.

Apart from a bonus issue, some infotech companies have also taken the ESOP route to reward their employees. Infosys, for example, allotted shares on a preferential basis to its employees in the early 1990s. However, as the Sebi Act was yet to be enacted, the preferential allotment was made at par, bringing windfall gains to employees.

However, Leading Edge's employees may not have a similar experience and will have to be content with equity shares at Rs 500 (average of the past six months high/low). Brokers feel that the market had sensed a bonus from LeadingEdge much earlier. The scrip has, in the past 13 trading sessions, shot up from Rs 480 to Rs 900 and more than trebled from Rs 292 to over Rs 900 in less than two months. Even today, on an annualised earnings per share of Rs 29, the scrip is trading at a price-to-earnings (p/e) ratio of only 31. At the same time, shares of Infosys, NIIT and Wipro command a much higher p/e ratio of 53, 49 and 77 respectively.

In the case of Leading Edge, a low floating stock has given a big push to the stock. Of the equity capital of Rs 3.29 crore, the promoters hold around 56 per cent, with another four per cent held by close NRI associates. This leaves the floating stock of less than 13 lakh shares in the market.

The Rs 35-crore company has an equity base of Rs 3.29 crore and reserves as on March 1997 stood at Rs 11.19 crore, thereby yielding a strong book value of over Rs 44. On a strong book value of Rs 44, Leading Edge can afford to reward the shareholders with a liberal bonus of 1:1.