Back₹1 lakh rises more than 100 times to ₹1.12 crore in 21 years as PSU stock gave bonus shares on 4 occasion
IOCL has issued bonus shares in 2009, 2016, 2018 and 2022
PremiumStock market investments not just yield from the portfolio stocks' appreciation, but they also yield through dividends, bonus shares, buyback of shares, rights, etc. According to market experts, a long term investor has a better chances of availing of these kinds of investments in comparison to short term investors. As these announcements are not done on a regular basis. For example, let's take bonus shares. On most of the times, a company announces bonus shares once in a while. However, there are some listed stocks that issues bonus shares to its shareholders quite often.
Indian Maharatna company, Indian Oil Corporation Limited or IOCL shares are glaring example of it. The PSU stock has given bonus shares on 4 occasions in last 20 years. This means, the Indian Maharatna company has given bonus shares after a gap of four to five years in last two decades. To understand how these bonus shares were effective in raising the stock investment yield for a long term investor, one needs to know that if an investor had invested ₹1 lakh in this stock 21 years ago, its ₹1 lakh would have surged 100 times to ₹1 crore.
IOCL bonus share history
In last 21 years, the state-owned oil producer company has issued bonus shares in 2009, 2016, 2018 and 2022. It first announced bonus shares in October 2009 in the ratio of 1:1 that means one bonus share for each equity share held by the shareholders. In October 2016, the PSU company again announced bonus shares in 1:1 ratio. In March 2018, IOCL announced bonus shares in 1:1 ratio. Last time, when IOCL bonus shares were issued was in June 2022. In June 2022, IOCL announced bonus shares in 1:2 ratio that means one bonus share for two equity shares held by the shareholder.
Impact of bonus shares
If an investor had invested ₹1 lakh in IOCL around 21 years ago, then he would have got 14,285 IOCL shares as IOCL share price was around ₹7 apiece in September 2001. After issuance of bonus shares in 1:1 ratio in 2009, its net shareholding would have doubled to 28,570. This would have further doubled to 57,140 in 2016 after issuance of bonus shares in 1:1 ratio. Similarly, this 57,140 IOCL shares would have become 1,14,280 shares in 2018 after another 1:1 bonus share issue. In June 2022, IOCL announced 1:2 bonus shares that would have further pulled up the shareholders net shares at 1,71,420. So, due to the bonus share issuance, a long term shareholder's net shareholding grew 12 times.
₹1 lakh turns to ₹1.12 crore
As IOCL share price today is ₹65.75 apiece and net shareholding of the investor is now 1,71,420 apiece. So, absolute value of one ₹1 lakh invested 21 years ago would have been ₹1,12,70,865 or ₹1.12 crore, provided the shareholder had remained invested in the scrip throughout the period taken into above calculations.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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