2:1 bonus shares impact: ₹1 lakh becomes ₹11.82 crore in 10 years
Bonus shares: Apart from stock price appreciation, a long term investor enjoys some extra benefit from its value picks like interim or final dividend, buyback of shares, bonus shares, stock split, spin off, etc. These additional benefits are those that a listed company shares with its loyal long term investors from quarterly or yearly earnings of the company.
To understand how these rewards pay in long term, we need to look at shares of Jyoti Resins and Adhesives Ltd. This small-cap chemical stock recently issued bonus shares in the ratio of 2:1, which means the company issued two bonus shares to its eligible shareholders for every shares they owned. Due to issuance of these bonus shares, one’s ₹1 lakh invested a decade ago turned to ₹11.82 crore.
Jyoti Resins share price history
Jyoti Resins shares are one of the multibagger stocks that Indian stock market has produced in last one year. This small-cap chemical stock has risen from around ₹535 to ₹1281.50 apiece levels in last one year, delivering to the tune of 140 per cent return to its shareholders. In last five years, this chemical stock has risen from around ₹22.55 to ₹1281.50 per share levels, logging 5,600 per cent return in this time.
Similarly, in last one decade, this small-cap multibagger stock has surged from around ₹3.25 apiece levels to ₹1281.50 per share levels, logging 39,300 per cent rise in this time. However, there is a catch in Jyoti Resins share price history.
Jyoti Resins bonus share history
As per the information available on official BSE website — bseindia.com, this multibagger stock traded ex-bonus on 8th September 2022 for issuance of bonus shares in 2:1 ratio. This means, the small-cap chemical company has given two bonus shares for one share hold by the shareholders of this company.
Impact on shareholding
If someone had invested ₹1 lakh in this multibagger stock 10 years ago, buying one share at ₹3.25 apiece. One would have got 30,769 Jyoti Resins shares in one’s demat account. After issuance of 2:1 bonus shares, these 30,769 shares would have surged to 92,307 company shares.
₹1 lakh turns to ₹11.82 crore
Jyoti Resins share price ended on Friday last week at ₹1281.50 apiece. So, if an investor had invested ₹1 lakh in this multibagger chemical stock 10 years ago, then absolute value of one’s ₹1 lakh would have turned to ₹11,82,91,420.5 or around ₹11.82 crore.
In case there had been no 2:1 bonus share announcement, one’s ₹1 lakh would have turned to ₹3,94,30,769 or ₹3.94 crore in last 10 years.
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Ganesh
http://ganesh@finplay.inFinance enthusiast, Mutual fund expert.