1:2 bonus shares, 1:5 stock split: NSE SME stock turns ₹1.34 lakh to ₹5.85 lakh in six years

Bonus share, stock split effect: A long term stock market investor enjoys some additional benefits over short term investors. These benefits include issuance of bonus shares, rise in shareholding post-stock split, dividend, buyback of shares, etc. A listed company declares these beiefits from its capital reserves and net profit. Prima facie, these benefits might not look lucrative as these doesn't make any change in absolute value of an investor after share adjustment. However, in long term these rewards lead to whopping return.

To understand how these benefits lead to rise in one's profit, one need to look at the journey of NSE SME issue One Point One Solutions Limited. The initial public offering of One Point One Solutions Limited was launched in December 2017 at a price band of ₹65 to ₹67 per equity share. One Point One Solutions IPO lot size comprised 2,000 company shares. The book build issue was proposed for listing on NSE SME Emerge platform. The SME IPO listed on NSE at ₹80.40 apiece, delivering to the tune of 20 per cent listing premium to the lucky allottees. However, it is said that money is not in buying and selling of stocks but in wait.

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If an allottee had remained invested in this book build SME issue despite strong debut on Dalal Street, one would have benefited from stock split and bonus shares. The SME stock traded ex-bonus and ex-split in January 2021.

Bonus shares, stock split details

As per the information available on NSE in corporate announcement of the company, the board of directors of the company declared 1:2 bonus shares in late 2020. This SME stock had declared issuance of bonus shares in 1:2 ratioo, means one bonus share was given to the eligible shareholders for owning two shares of the company on bonus shares record date. So, if an allottee had remained invested in this SME stock despite strong debut, an allottees shareholding in the company would have surged to 3,000 [{(1+2)/2} x 2000].

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In January 2021, the NSE SME stock traded ex-split as well. The company board had declared stock split in 1:5 ratio, which means an allottees shareholding in the stock surged 5 times. So, if an allottee had remained invested in the scrip after listing, its shareholding would have surged five times to 15,000 (3,000 x 5).

₹1.34 lakh turns to ₹5.85 lakh in six years

As One Point One Solutions share price today hit new 52-week high of ₹39, if an allottee had remained invested in this NSE SME stock till date, the absolute value of one's investment in the scrip would have been ₹5.85 lakh ( ₹39 x 15,000). So, if an allottee had remained invested in the scrip till date, its ₹1.34 lakh investment would have turned to ₹5.85 lakh in six years.

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