Long-term investors have the potential to gain additional advantages in the stock market compared to short-term investors or day traders. These benefits include not only rising share prices, but also various rewards that publicly traded companies pay out of their capital reserves. Such rewards may take the form of interim, final, or special dividends, as well as bonus shares, share buybacks, or stock splits.
To illustrate the effect of these rewards, let’s look at the case of the Shreeji Translogistics IPO. This SME IPO featured a bonus stock issue and stock split, significantly changing the fortunes of long-term investors.
Shreeji Translogistics’ IPO was launched in October 2017 and listed on the BSE SME Exchange in October 2023. The IPO cost ₹130 per share, with a minimum investment of ₹1.30 lakh for 1,000 shares.
After the listing, the company issued bonus shares at a ratio of 2:1. This means that shareholders received two additional free shares for every share held. Therefore, a lucky beneficiary who remained invested in the stock would have increased their ownership to 3,000 shares.
In addition, the company later announced a 1:5 stock split. This resulted in each share being split into five lower-par shares. This would have increased the lucky beneficiaries’ shareholdings to 15,000 shares.
The current Shreeji Translogistics share price is ₹68.70 per share on the BSE. If a long-term investor had maintained their investment since the IPO, their initial investment would have grown from ₹1.30 lakh to ₹10.30 lakh within six years.
It is important for investors to consider these factors and the potential returns from corporate actions when making investment decisions. However, it is advisable to consult certified experts before making an investment decision.
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