Three 1:2 Bonus Share Effects: A long-term stock market investor not only benefits from an increase in the stock price, but also gets rewarded in the form of interim or final dividends, bonus shares, rights issues, stock splits, etc., from listed companies. For example, these could be loyalty rewards. Not attractive for an intraday trader, but a long term investor Share Market These loyalty rewards turn into compounded profits for positional investors.
Shares of Varun Beverages are a shining example of this. This multibagger IPO was launched in October 2016 and shares of Varun Beverages were listed BSE and NSE in November 2016. Post listing of the shares, Varun Beverages Limited has declared bonus shares on three occasions. On all these three occasions in the last six years, the bottler has declared bonus shares in the ratio of 1:2 for various beverages company including PepsiCo, which means for every two shares of Varun Beverages held by the investor a bonus share.
impact on long term shareholders
As reported earlier, the Varun Beverages IPO was launched in October 2016 at a price band from 440 445 each level and one lot of Varun Beverages IPO consisted of 33 shares of the company. It means, if an allottee had got one lot through the share allotment process, what was his minimum investment in shares of Varun Beverages? 14,685 ( 445 x 33).
Had the lucky allottees continued to invest in Varun Beverages stock despite its weak listing? 430 per share on BSE and NSE), it will benefit from the issue of one bonus share for every two shares it holds. After issuing bonus shares for the first time after listing, A’s shareholding would have increased to 49 (33 + 16). After the 1:2 bonus share in June 2021, one’s 49 shares would have increased to 73 ((49 + 24) which later increased to 109 (73 + 36).
turns into 14,685 1.52 lakh
Varun Beverages share price is around today 1400. of one would have risen to 14,685 1,52,600 or 1.52 Lakhs, giving around 950 per cent returns to the lucky allottees who stayed invested in this stock during the above mentioned period.
Know your inner investor
Do you have guts of steel or are you a victim of insomnia regarding your investments? Let’s define your investment approach.
catch all business News, market news, today’s fresh news events and Breaking News Update on Live Mint. download mint news app To get daily market updates.