1:1 bonus shares, 1:10 stock split: ₹1.50 lakh turns to ₹7.41 lakh in 6-year
Bonus shares, stock split effect: Investing in stocks is like investing in a business. Hence, one should try and hold a stock as long as one can. This rule applies to both primary and secondary market investors. A long-term investor not just earns from stock price appreciation but from various other rewards that a listed entity declares from time to time. These rewards can be in the form of bonus shares, buyback of shares, stock split, interim, special, or final dividend, etc. Prima facie, these rewards may not look lucrative but in the long term, these help your money grow many folds.
To understand how these rewards impact your investment, you need to look at the journey of Bhatia Communications & Retail (India) shares. The BSE SME IPO was launched in February 2018 at ₹150 apiece. The SME IPO was listed on the BSE SME platform at ₹153.95 per share level. However, after the positive debut in the Indian stock market, Bhatia Communications management delivered some extra rewards from the capital reserves of the company. The board of directors of the SME company declared 1:1 bonus shares in 2018 and a 1:10 stock split in 2022. So, if an allottee had remained invested in the SME stock till today despite the positive debut of shares, the shareholding of the allottee would have surged to 20 times after the issuance of 1:1 bonus shares and 1:10 stock split.
Bhatia Communications IPO history
As per the Bhatia Communications IPO details, bidders were allowed to invest in this SME IPO in lots and one lot of the public issue comprised 1000 shares. So, if an allottee had remained invested in this SME stock till today, its shareholding in the company would have risen to 20,000 (1,000 x 2 x 10) after the issuance of 1:1 bonus shares and 1:10 stock split.
₹1.50 lakh turns to ₹7.41 lakh
As a bidder of this SME IPO was allowed to apply in lots and one lot of the public issue comprised 1000 shares. The minimum investment of an allottee had been ₹1.50 lakh ( ₹150 x 1,000). Bhatia Communications share price today is ₹37.05 apiece and the stock has touched 5 percent upper circuit. So, the absolute value of an allottee (if it had remained invested in the SME stock till today without any interruption) would have surged to ₹7.41 lakh ( ₹37.05 x 20,000).
Disclaimer: The views and recommendations above are those of individual analysts, experts, and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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Published: 27 Feb 2024, 01:40 PM IST
