₹1 lakh turns to ₹2.65 cr as PSU stock gave bonus shares 4 times since 2000

Bonus shares impact: Stock investment is not gambling. In fact, a gambler helps an investor make money from the stock market. So, positional investors are advised to remain insulated from the short term sentiments and stick with their long term conviction that inspired them to choose the stock. Because a long term investor not just earn from the stock rally, it earns from companies general reserves as well. From time to time, listed companies distribute its general reserves to its loyal long term investors through dividend, bonus shares and share buyback. So, a long term investor has various other means of income that helps him or her to earn much more than a normal short term trader.

To understand how a long term investor's return gets changed with simple bonus share issues, one needs to look at the Bharat Petroleum Corporation Ltd or BPCL bonus share history. Since December 2000, the state-owned company has announced bonus shares on four occasions. In last 23 years, BPCL shares trade ex-bonus in December 2000, July 2012, July 2016 and July 2017. On first three occasions, it announced 1:1 bonus shares whereas in 2017, BPCL declared 1:2 bonus shares.

BPCL bonus share history
If a BPCL shareholder had one stock in its portfolio, its 1 share would have become 2 (1 x 2) after 1:1 bonus share issue in December 2000. Later on, it would have turned to 4 (2 x 2) due to 1:1 bonus share issuance in July 2012. These four BPCL stocks would have turned to 8 (4 x 2) in July 2016 after 1:1 bonus share issuance. Similarly, these 8 BPCL stocks would have turned to 12 (8 x 1.5) in 2017 after issuance of 1:2 bonus shares. So, shareholding of an investor surged to 12 times due to these 4 bonus share issues declared by BPCL since 2000.
Impact on investment
Taking cue from bonus share impact on shareholders, if an investor had invested ₹1 lakh in the scrip in the beginning of August 2000, it would have got one BPCL shares at around ₹15 apiece. So, the investor would have got 6,667 BPCL shares after investing ₹1 lakh in BPCL stocks in August 2000. These 6,667 BPCL shares would have become around 8,000 BPCL shares due to bonus share issuance from 2000 to till date.

BPCL share price today is ₹331.80 apiece on NSE. Hence, net worth of an investors ₹1 lakh would have turned to around ₹2,65,45,327 or ₹2.65 crore. In case, there had been no bonus shares issued, the real growth of an investor's money had been from ₹15 to ₹331.80, around 22.12 times. This means ₹1 lakh would have turned to ₹22.12 lakh only. so, it's bonus shares' impact that turned ₹1 lakh to ₹2.65 crore.