2:1 bonus share, 1:10 stock split: Multibagger SME IPO turns ₹1.2 lakh to ₹23.4 lakh in nine years

livemint.com:

Multibagger SME IPO: A long term investor not just earn from stock movement, but it earns from various rewards announced by the listed entity from its capital reserves. The listed entity's rewards its shareholders in the form of interim/final/special dividend, bonus shares, buyback of shares, stock split, etc. Prima facie, these rewards might not look attractive, but in long term, these rewards lead to whopping return for its shareholders.

Those who want to know the impact of these rewards, they need to look at BSE SME stock, Captain Pipes. This SME IPO was launched in December 2014 at ₹40 apiece and one lot of the SME IPO comprised 3,000 company shares. This means, an allottee's minimum investment in this BSE SME IPO was ₹1.20 lakh ( ₹40 x 3,000).

The BSE SME issue had a par listing as it listed on BSE SME exchange at ₹41.90 apiece levels, delivering listing gain of ₹1.90 per share to the lucky allottees. However, if an allottee had remained invested in the scrip despite dismal listing, it would have gained whopping return from the bonus share and stock split rewards. In the year 2023, board of directors of the company declared issuance of bonus shares in 2:1 ratio, which means two bonus shares for every stock held by the shareholder on the record date.

The stock traded ex-bonus on 3rd March 2023. So, if an allottee had remained invested in the stock till date, its 3,000 shareholding would have surged to 9,000 (3,000 x 3), as two additional shares were given as bonus after the record date. The board of directors also declared stock subdivision in 1:10 ratio, which means one share of the company with face value of ₹10 was subdivided into 10 company shares with a face value of Re 1 per equity share.