From ₹1.32 Lakh to ₹56.70 Lakh: How SBC Exports’ Bonus Shares and Stock Split Made This SME Stock a Multibagger

Investing in the stock market is often compared to the phrase, “Rome wasn’t built in a day.” Just as Rome took time to reach its glory, wealth in the stock market takes time to grow. It’s often said that success in the market isn’t about buying and selling quickly but about holding onto your investments. This principle applies strongly to IPO (Initial Public Offering) investors. If you believe in a company’s future, it’s wise to hold onto the shares for the long term, even if the company is small.

When you hold onto a stock for a long time, you can benefit from various rewards like dividends, bonus shares, and stock splits. A stock split, for example, is when a company increases the number of its shares by dividing each existing share into more shares, which lowers the price per share but doesn’t change the overall value of the company. This makes the stock more affordable for smaller investors.

SBC Exports: A Wealth-Building Journey

Let’s take the example of SBC Exports, a company that launched its public issue in June 2019 at a fixed price of ₹22 per share. Today, the stock trades around ₹31.50 per share on the BSE. But what makes this stock a true wealth builder are the corporate actions it announced after listing, including two rounds of bonus shares and one stock split.

Bonus Shares: Doubling and Tripling Shareholding

SBC Exports has issued bonus shares twice. The first time was on 22 February 2022, when the company issued 1:1 bonus shares, meaning every shareholder got one additional share for each share they owned. The second time was on 19 January 2024, with a 1:2 bonus issue, where shareholders received one additional share for every two shares they owned. So, if an investor had held onto the stock since the IPO, their shareholding would have tripled by now.

Stock Split: Multiplying Shareholding Tenfold

In addition to the bonus shares, SBC Exports also announced a stock split, which took place on 22 February 2024. The stock split was in the ratio of 1:10, meaning every share was divided into ten. This means that an investor’s shareholding would have increased tenfold just from the stock split alone.

Total Effect: 30x Increase in Shareholding

Combining the effects of the two bonus shares and the stock split, an investor who bought one lot of 6,000 shares during the IPO would now own 1,80,000 shares (6,000 shares multiplied by 30).

Turning ₹1.32 Lakh into ₹56.70 Lakh

When the SBC Exports IPO launched, one lot of 6,000 shares would have cost ₹1,32,000 (₹22 per share). Today, with the share price at around ₹31.50, the value of these shares has grown to ₹56.70 lakh. So, an initial investment of ₹1.32 lakh in SBC Exports in 2019 would have grown to ₹56.70 lakh in just five years.

This example shows the potential of long-term investment and the power of compounding through corporate actions like bonus shares and stock splits. For investors willing to hold onto their stocks, the rewards can be substantial.