How Infosys' 1:1 Bonus Shares Policy Turns A Stock From A Lakh To Rs 2.75 Cr In 20 Years

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posted on 1 year ago — updated on 1 second ago

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A bottom finisher who believed in buying at a discount got the chance to purchase Infosys shares at levels around Rs 45 each almost 20 years ago.

One of the dividend-paying stocks with a history of periodically awarding bonus shares to its long-term positioned owners is Infosys. This practice of the Infosys board makes this company a profitable long-term investment option as it provides its investor with an added advantage. For instance, Infosys regularly distributed interim and final dividends while also awarding bonus shares three times over the previous 20 years. Most crucially, Infosys has always awarded bonus shares in a 1:1 ratio, meaning one bonus share for every share a shareholder held on the bonus share record date.

According to data on the BSE website, Infosys has awarded bonus shares three times during the past 20 years. On December 2, 2014, it began trading without bonus shares that were issued in a 1:1 ratio. Similarly, Infosys stock traded ex-bonus on June 15, 2015, in exchange for a 1:1 bonus share issue. On September 4, 2018, qualified Infosys shareholders, who owned Infosys shares, were issued one bonus share for every share of the IT company they owned. The last time ex-bonus shares of Infosys were traded was at this time.

A bottom finisher, who believed in buying at a discount, got the chance to purchase Infosys shares at levels around Rs 45 each almost 20 years ago. The investor would have received 2,222 Infosys shares if they had invested 1 lakh at that time in Infosys equities. Then, in 2014, 2015, and 2018, Infosys issued three further 1:1 bonus share declarations. This indicates that after each 1:1 bonus share, Infosys stockholders’ holding would have increased by 8 times (2 × 2 x 2). The total shareholding of an investor who invested Rs. 1 lakh in Infosys equities twenty years prior would now be Rs. 17,776. (2,222 x 8).

The closing price of Infosys shares on the NSE on January 25, 2023, was Rs 1,542. This indicates that an investor who made a one-lakh investment in Infosys shares twenty years ago would now have a one-lakh investment of 2,74,10,592. The absolute value of 1 lakh would be around 2.75 crore if interim dividends and final dividends announced during these 20 years are added together.

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