Investing in the stock market isn’t a quick way to get rich. It takes time and patience. If you believe in a company’s potential, it’s smart to hold onto your shares for the long term. This is especially true for IPO investors. Holding onto your shares can lead to wealth creation through various rewards like dividends, bonus shares, and stock splits.
Let’s take the journey of Captain Polyplast as an example. When it launched its IPO in November 2013, each share was priced at ₹30. After listing on the BSE SME Exchange, the price rose to ₹33, giving investors a 10% gain. But those who held onto their shares were rewarded even more.
Impact of Bonus Shares and Stock Splits
Captain Polyplast gave bonus shares to its shareholders in 2014 and 2015. In 2018, it also had a stock split. These actions didn’t change the company’s value, but they significantly increased the returns for long-term investors.
Bonus shares are extra shares given to shareholders based on their existing holdings. For example, if you had 4000 shares and the company gave a 1:5 bonus, you’d end up with 4800 shares. Similarly, if it gave a 1:8 bonus, you’d have 5400 shares.
Stock splits also increase the number of shares you own. For instance, if you had 5400 shares and there was a 1:5 split, you’d end up with 27,000 shares.
Investment Value
The Captain Polyplast IPO allowed investors to apply for lots of 4000 shares each. So, if you invested ₹1.20 lakh (₹30 x 4000) initially, and held onto your shares, your investment would now be worth ₹13.45 lakh, with each share priced at ₹49.82.
This shows the power of long-term investing and how bonus shares and stock splits can significantly increase your wealth over time.
Disclaimer: The views and investment tips expressed by investment experts on Sharepriceindia.com are their own and not those of the website or its management. Sharepriceindia.com advises users to check with certified experts before taking any investment decisions.
