Shares of parent of online fashion retailer Nykaa, FSN E-Commerce, advanced 2.5 per cent to close at Rs 1,304.55 in an otherwise weak market after its board approved bonus issue of shares in ratio of 5:1.

"Board recommended the Bonus Issue of Equity Shares in the proportion 5 (Five) fully paid-up Equity Share of Re. 1/- each for every 1 (One) fully paid-up Equity Shares of Re. 1/- each held by the shareholders of the Company as on the record date," FSN E-Commerce said in a stock exchange filing.

The stock surged as much as 11 per cent to hit an intraday high of Rs 1,414 before paring gains on account of profit booking, analysts said.

The company has fixed November 03, 2022, as the record date for the purpose of determining members eligible for bonus equity shares.

Last week, Nykaa said its board will meet on October 3 to consider a maiden bonus issue.

This will be the first bonus issue of shares by the Falguni Nayyar-founded company post its much-spoken about initial public offering (IPO) last November. Nykaa shares crossed the Rs 1 lakh crore market capitalisation mark on the first day of trading after it was listed, which caught the attention of most industry watchers.

According to analysts, the company is providing this bonus issue to increase liquidity in its stock and become more lucrative to investors. "They are not giving this bonus issue from the money they have earned. Instead, they will be giving it from their equity reserve, since Nykaa was listed at a huge premium," market sources told Outlook Business.