Table of Contents
Unlocking Bonanza
In the world of stock investing, bonus stocks can be a game-changer for long-term investors. When a company declares bonus stocks, it’s like receiving a free gift that can significantly boost your investment value. In this article, we’ll delve into the bonus shares effect and explore how Rhetan TMT shares benefited from their IPO lot size.
Understanding Bonus Stocks:
Bonus stocks are a type of stock split where a company divides its existing shares into new shares with a face value of one-tenth of the original share. This is usually done to make the company’s shares more affordable for investors and to reduce the number of shares outstanding, which can lead to a lower market capitalization.
The Impact of Bonus Stocks:
When a company declares bonus stocks , it can have a significant impact on an investor’s portfolio. For instance, in Rhetan TMT’s case, they declared 11:4 bonus shares, meaning investors received eleven bonus stocks for every four shares they held. This led to a substantial increase in the value of their investment.
The Effect of Stock Split:
In addition to bonus shares, stock splits can also benefit investors. A stock split reduces the face value of each share and increases the number of outstanding shares, making it easier to buy and sell stocks at lower prices. Rhetan TMT’s 1:10 stock split meant that one share was subdivided into ten shares with a face value of Re 1 apiece.
Rhetan TMT Shares: A Case Study
To understand the impact of bonus stocks on an investment, let’s take a look at Rhetan TMT shares. The BSE SME IPO was listed on September 5, 2022, and initially traded at ₹70 apiece. The IPO lot size comprised 2000 company shares.
Bonus Shares and Stock Split: A Winning Combination
When the allottees waited for their bonus shares and stock split benefits, they would have benefited from the combined effect of both rewards. The bonus shares gave them an additional 5500 shares for every four shares they held, while the stock split increased their shareholding tenfold.
Net Shareholding: A Surprising Increase
If an allottee had remained invested in Rhetan TMT shares to date, their net shareholding would have grown from 2000 to 25,500 shares (20,000 + 5,500). This represents a staggering increase of ₹4.49 lakh (₹21.55 x 25,550).
A Small Investment Turns into a Fortune
To illustrate the power of bonus shares and stock splits, let’s consider an allottee who invested ₹1.40 lakh in Rhetan TMT shares. After the IPO, their investment would have grown to ₹5.49 lakh (₹21.55 x 25,550), representing a return of ₹4.09 lakh.
Conclusion:
Bonus shares and stock splits can be powerful tools for long-term investors. By holding onto their investments and waiting for these rewards, allottees can significantly boost their portfolio value. Rhetan TMT shares are an excellent example of the bonus shares effect, with an initial investment turning into a fortune after the IPO.
Frequently Asked Questions:
- What is a bonus share?
Bonus shares are a type of stock split where a company divides its existing shares into new shares with a face value of one-tenth of the original share. - How do bonus shares affect my investment portfolio?
Bonus shares can significantly boost your investment value, especially when combined with stock splits. - Can I benefit from bonus shares and stock splits in Rhetan TMT shares?
Yes, allottees who remained invested in Rhetan TMT shares would have benefited from the 11:4 bonus shares and 1:10 stock split rewards.
Pingback: Vishal Mega Mart IPO GMP: Rs 74 to Rs 78 Interesting price