Two bonus shares, one stock split: Multibagger SME stock SBC Exports turns ₹1.32 lakh into ₹56.70 lakh in five years

Bonus shares, stock split effect: 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 also applies to an IPO (Initial Public Offering) investor. If an IPO investor is convinced about a company's business prospects, then irrespective of size, one should stick with one's conviction and hold the stock as long as possible. A stock split is a corporate action that increases the number of a company's outstanding shares by dividing each share and reducing its price. This does not affect the company's market value but makes the stock more affordable for smaller investors.

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 after share allocation, an allottee enjoys the benefit of 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 truly grasp the potential for wealth creation through long-term investment, let's delve into the inspiring journey of SBC Exports shares. The company's public issue was launched in June 2019 at a fixed price of ₹22 apiece. Today, the stock is trading around ₹31.50 apiece on the BSE. However, post-listing, some corporate announcements made an ideal wealth-creating opportunity for a long-term investor. The company has declared two bonus shares and one stock split in these five years post-listing.

SBC Exports bonus shares history

According to BSE, the SME stock has traded ex-bonus on two occasions. It first traded ex-bonus on 22 February 2022 to ascertain the beneficiary shareholders for issuance of 1:1 bonus shares. Later, the stock again traded ex-bonus on 19th January 2024 to finalise the list of shareholders eligible to issue 1:2 bonus shares. So, if an allottee had remained invested in the scrip after share allocation during the primary market phase, its shareholding would have surged to three times( twice after 1:1 bonus shares and 1.50 times after 1:2 bonus shares).

SBC Exports stock split history

BSE said SBC Exports shares traded ex-split on 22nd February 2024 to finalise the eligible shareholders for a 1:10 stock split benefit. So, if an allottee had remained invested in this SME stock to date, its shareholding would have risen ten times after the stock split benefit. So, the net rise in shareholding of an allottee holding the scrip to date would have been 30 times the IPO lot size.

Bonus shares, stock split effect

As one lot of the SBC Exports IPO comprised 6000 company shares, if an allottee had remained invested in the scrip to date, its net shareholding would have surged to 1,80,000 (6,000 x 30).

₹1.32 lakh turns to ₹56.70 lakh

A bidder was allowed to apply for the SBC Exports IPO in lots, and one lot of the public issue comprised 6,000 company shares. So, the minimum investment of an allottee would have been ₹1,32,000 ( ₹22 x 6000). As SBC Exports share price today is around ₹31.50 apiece. The absolute value of an allottee's investment would have surged to ₹56,70,000 or ₹56.70 lakh. So, if an allottee had remained invested in this SME stock after investing in the IPO launched in June 2019, one's ₹1.32 lakh would have surged to ₹56.70 lakh in five years.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.