- Last time when the IT stock traded ex-bonus was in May 2018
Money is not in buying and selling of stocks on intraday basis. In fact, those who made money from stock market, they hold the stock for long term and then only they saw their money growing many folds. A long term stock market investor not just gain from the appreciation in stock price but from the reserves of the listed company as well. A listed company reward its long term investors by sharing its profit in terms of dividend. apart from this, the company announces bonus shares, buyback of shares, stock split, etc. that also helps a long term investor to gain in long term.
To understand how issuance of bonus shares can change the fortunes of a long term investor, we need to look at TCS shares. This Tata group share has announced bonus shares in the ratio of 1:1 on three occasions in last 18 years and if an investor had invested ₹1 lakh in this stock 18 years ago, its shareholding would have grown eight times after these three 1:1 bonus share issues. In fact, its ₹1 lakh would have turned to ₹2.20 lakh today.
TCS bonus share history
TCS shares trade ex-bonus in 2006 when the IT giant announced 1:1 bonus shares to its shareholders. Later on, the Tata group IT company trade ex-bonus in June 2009 paying one bonus shares to its shareholders for carrying one TCS share. In Mat 2018, TCS board of directors once again rewarded its long term investors by declaring one bonus share for carrying one share of the company.
Impact of bonus shares
If an investor had invested ₹1 lakh in TCS, 18 years ago, it would have got near 833 TCS shares as one TCS share was around ₹120 around 18 years ago. After 1:1 bonus share announcement in 2006, these 833 TCS shares would have become 1,666. Again in June 2009, these 1,666 TCS shares would have become 3,332 TCS shares after issuance of 1:1 bonus share by the IT company. These 3,332 TCS shares would have further grown to 6,664 shares after issuance of 1:1 bonus shares in May 2018.
₹1 lakh turns to ₹2.20 crore
TCS share price today is around ₹3270 apiece. So, absolute value of one’s ₹1 lakh invested 18 years ago would have been ₹2.20 crore. So, one’s ₹1 lakh turned to ₹2.20 crore in last 18 years and 1:1 bonus shares announced thrice in this period played a major role in this huge stock return to the TCS shareholders.
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