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Business News/ Markets / Stock Markets/  Two 1:1 bonus issues, 1:2 stock split: Multibagger SME IPO turns 1.2 lakh to 20.5 lakh in eight years

Two 1:1 bonus issues, 1:2 stock split: Multibagger SME IPO turns ₹1.2 lakh to ₹20.5 lakh in eight years

Multibagger IPO: In next eight years after successful listing, the SME stock has declared two 1:1 bonus issues in 2017 and 2022 respectively

Multibagger IPO: In 2022, the SME stock declared stock split in 1:2 ratio. (Photo: AFP)Premium
Multibagger IPO: In 2022, the SME stock declared stock split in 1:2 ratio. (Photo: AFP)

Bonus shares, stock split effect: Investing in stocks or public issues is like investing in business. As per majority of the successful stock market investors, one should try and hold one stock as long as one can becuase it helps an investor to get some extra benefit that a listed company announces from its capital reserves. These rewards could be in the form of bonus shares, dividends, buyback of shares, stock split, etc. Prima facie, these rewards may not look big, but in long term, these rewards lead to whopping return on one's money.

To understand how these rewards can change your fortunes in long term, you need to look at the journey of Star Housing Finace Ltd from primary market to secondary market. The non-banking financial company (NBFC) launched its public issue February 2015 at a fixed price of 30 per equity share. The public issue was proposed for listing on BSE SME exchange. One lot of the SME IPO comprised 4,000 company shares. The SME stock listed on 20th March 2023 at 32 apiece levels and ended at 31.75 per share after making intraday low of 31.50 on listing date. So, the SME stock listed at limited premium and ended higher from the issue price on share listing date.

Yet, if an investor had remained invested in this stock till date despite positive debut, one would have benefited from two bonus issues and one stock split declared by the company in next eight years.

Star Housing Finance bonus share history

As per the information available on official BSE website, Star Housing Finance Limited issued bonus shares on two occasions. It traded ex-bonus for the fist time after listing on 7th March 2017 as board of directors of the financial company had declared bonus shares in 1:1 ratio. Means, one bonus share for every share held by an eligible shareholder. Likewise, the stock traded ex-bonus once again on 16th December 2022 after declaration of 1:1 bonus shares.

Star Housing Finance stock split history

After successful listing on BSE SME Exchange, the SME company declared stock split in 1:2 ratio. The stock traded ex-split on 16th December 2022 while trading ex-bonus on the same date.

Bonus shares, stock split effect

As mentioned above, Star Housing Finance IPO was launched in February 2015 and a bidder was able to apply for the IPO in lots. One lot of the SME IPO comprised 4,000 company shares. As the IPO was offered at fixed price of 30 per equity share. Minimum investment of an allottee would have been 1.20 lakh ( 30 x 4000).

After issuance of 1:1 bonus shares in 2017, an allottees shareholding would have doubled to 8,000 and later on in December 2022, it would have further went to 16,000 after second 1:1 bonus issue. As the stock traded 1:2 ex-split on 16th December 2022, these 16,000 shares would have further surged to 32,000.

1.20 lakh turns to 20.50 lakh

So, if an allottee had remained invested in this SME IPO till date despite positive listing, its shareholding in the compnay would have surged to 32,000 after ttwo bonus issues and one stock split in 1:2 ratio. As Star Housing Finance share price today is around 64 apiece, absolute value of 1.20 lakh invested by the allottee would have surged to 20.48 lakh. the company has declared dividends in these eight years as well. If we add those dividends as well, then the absolute value of one's 1.20 lakh would come around 20.50 lakh provided the allottee re-invested the dividend earned from its shareholding from time to time.

Star Home Finance Q2 results

The retail home finance company declared its Q2 results 2023 on Wednesday this week. In Q2FY24, the NBFC reported 110 per cent YoY increase in AUM to 319.43 crore. The company disbursed 108.30 crore registering y-o-y growth of 49 per centInterest income of the company grew by 92.88 per cent Yoy and total income grew 75.53 per cent YoY for the half year. PBT and PAT of the retail home finance company registered 26.25 per cent and 50.16 per cent YoY growth.

The retail home finance company received highest ever single sanction of 50 crore from the State Bank of India (SBI). During the period, Star HFL has got incremental sanction of 158.42 crore credit lines from 11 banks and financial institutions of which 88.42 crore has been drawn-down. The pipeline remains robust to cater to the growth aspirations for the second half of FY24.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Asit Manohar
Chief Content Producer at Live Mint Digital Team
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
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Published: 27 Oct 2023, 01:47 PM IST
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