Multibagger stock: A long term stock market investor not just gain from appreciation in one’s portfolio stocks. The investor gets benefit from the loyalty rewards like bonus shares, stock split, buyback of shares, interim and final dividend, etc. that a listed company announces from time to time from its capital reserves. To understand how an investor benefits from these rewards, we need to look at Aarti Industries share price history.
Aarti Industries shares are one of the multibagger stocks that Dalal Street has produced in recent years. However, the stock has announced two bonus shares in last one decade that has turned an investors ₹1 lakh to ₹1.55 crore in last 11 years.
Aarti Industries bonus share history
As per the information available on official BSE website — bseindia.com, Aarti Industries shares have give bonus shares in 2019 and 2021. On both occasions, it declared bonus shares in 1:1 ratio. On 27th September 2019, Aarti Industries shares traded ex-bonus stock for issuance of bonus shares in 1:1 ratio. Similarly, this multibagger chemical stock traded ex-bonus on 22nd June 2021 for 1:1 bonus share issue.
Bonus share impact
This means, on both occasions, Aarti Industries issued one bonus share for each share held by the eligible shareholders of the company. So, after the issuance 1:1 bonus shares on two occasions, a beneficiary shareholder’s net holding went up four times without any further investment.
So, if an investor who had invested in Aarti Industries shares 11 years ago buying one stock at around ₹56 apiece levels (after price adjustment due to two 1:1 bonus shares it is at ₹14 in Aarti Industries share price history), one would have got 1,785 company shares. After issuance of 1:1 bonus shares on two occasions in 2019 and 2021, these 7,140 shares would have surged to 28,568 (1,785 x 2 x 2).
₹1 lakh turns to ₹39 lakh
So, if an investor had investor invested ₹1 lakh in this multibagger chemical stock eleven years ago, its total shareholding in the company would have been 7,140. Aarti Industries share price ended at around ₹544 apiece on Friday. This means, absolute value of ₹1 lakh invested eleven years ago would have surged to around ₹39 lakh today ( ₹544 x 7,140).
How two bonus shares add value
After issuance of 1:1 bonus shares, Re 1 appreciation would mean ₹2 appreciation for the bonus share beneficiary as its shareholding got doubled after the bonus shares. Similarly, after second 1:1 bonus shares, one’s Re 1 investment would rise ₹4 as its shareholding doubled further (1 x 2 x 2).