Bonus share, stock split effect: Multibagger SME stock turns ₹1.34 lakh into ₹12.15 lakh in 7 years

Multibagger IPO: As Rome was not built in a day, a stock market investor can't become rich overnight. It is often said that money is not in buying and selling stocks but in waiting. This rule applies to the primary market investors as well. If an investor is convinced about a company's business prospects, then irrespective of its size, one should stick with one's conviction and hold the stock as long as one can. An IPO investor is advised to keep the scrip as long as possible to create wealth on the premium that promoters of the company have offered to its investors in the primary market. So, by holding a stock for a long term, an allottee enjoys the benefit of both wealth creation. By having a stock for the long term, they want the benefit of various other rewards like dividends, bonus shares, stock splits, buybacks of shares, etc., which helps an IPO allottee in wealth compounding.

To understand how a long-term investor gets the benefit of these rewards that a listed company announces from its capital reserves, one needs to look at the journey of One Point One Solutions shares from the primary market to the secondary market. Its promoters offered the One Point One Solutions shares at ₹65 to ₹67 per share in the primary market in December 2017. The SME IPO was proposed for listing on the NSE SME Emerge platform, where it listed at a whopping premium of ₹13.40 per share or 20 per cent against the upper price band of ₹67 per share. This 20 per cent listing premium was enough to lure an investor into booking profit and exit, and a good number of IPO allottees would have done the same as well. However, despite robust listing, if an allottee had remained invested in this SME share despite robust listing, its money would have grown many-fold. In other words, its ₹1.34 lakh investment (the minimum amount required to apply for one lot of the IPO) would have surged to ₹12.15 lakh in the last seven years. This is likely due to the two bonus shares being in a 1:2 ratio and one stock split in a 1:5 ratio after a strong debut on Dalal Street.

One Point One Solutions bonus shares

Per the information on the NSE website, after listing on the NSE SME Emerge platform on 26th December 2017, One Point One Solutions Ltd declared 1:2 bonus shares on two separate occasions. This SME stock traded ex-bonus on 25th April 2019 and 19th January 2022 for the issuance of 1:2 bonus shares. So, if an allottee had remained invested in the scrip despite a strong debut on Dalal Street, its shareholding of 2,000 company shares in one lot would have surged to 4500 (2,000 x 1.5 x 1.5).

One Point One Solutions stock split

Likewise, the SME stock traded ex-split on 19th January 2022 to find out the list of beneficiary shareholders for the 1:5 stock subdivision. So, after the 1:5 stock split, an allottee shareholding after the issuance of bonus shares in 1:2 bonus on two separate occasions would have surged to 12,500 (4500 x 5).

₹1.34 lakh turns to ₹12.15 lakh in 7 years

The SME IPO was launched at ₹65 to ₹67 per share, and one lot of the IPO comprised 2000 company shares. The minimum amount required for investing in this NSE SME IPO was ₹1.34 lakh ( ₹67 x 2000). If the IPO allottee had remained invested in the stock to date, its one log shareholding of 2000 shares would have surged to 12,500. As One Point One Solution's share price today is around ₹54 apiece, the absolute value of ₹1.34 lakh would be turned to ₹12.15 lakh ( ₹54 x 12,500) in these nearly seven years.

One Point One Solutions latest news

One Point One Solutions has been making waves in the news recently, particularly for its impressive client acquisition. Its subsidiary, ITCube Solutions Pvt. Ltd., a leading player in the technology solutions provider space, has announced a significant new client win in the European region. This client is a renowned global player specializing in providing solutions against brand threats, utilizing advanced AI-driven tools to combat online piracy, counterfeiting, and intellectual property infringement. The company's AI-powered platform allows for automated detection, enforcement, and removal of infringing content across digital platforms. With a global presence in New York, Barcelona, Beijing & Salt Lake City, and a reputation for providing scalable, cost-effective SaaS solutions, this new client is poised to change the industry landscape. This success story further underscores the potential for substantial growth through long-term investment in companies like One Point One Solutions.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, and not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.