In 20 years, Tata stock has grown from 1 lakh to 169 crores. From ₹3 to ₹2535
A multi-bagger stock is one in which a long-term stock investor benefits not just from an increase in the share price of its portfolio stock. There are numerous alternative sources of income for shareholders that allow their money to increase even when the stock is not rising. Announcements of interim dividends, bonus shares, and share buybacks, among other things, are additional avenues by which a long-term stock investor’s money can expand. However, if the stock grows in tandem with these factors, it becomes the frosting on the cake for stock investors.
Titan Company shares are one such firm that has provided excellent returns to its owners while also announcing bonus shares and a stock split. Titan shares are among the multibagger equities that the Indian stock market has produced in recent years.
Titan’s share price has risen from 3 to 2,535 per share, increasing over 845 times in the last 20 years. However, long-term investors have benefited from more than just stock price increase. During this time, the company also announced a 10:1 stock split and a 1:1 bonus share. Though an investor does not profit from a stock split, the number of shares issued increases and the input cost decreases. As the Tata group company announced a 10:1 stock split in June 2011, the stockholders who purchased Titan shares 20 years ago in August 2002 saw their input cost drop to 10% of their actual cost.
In June 2011, the Tata group corporation announced a 1:1 bonus share for its stockholders. As a result of the bonus share issuance, the cost price of Titan shares purchased 20 years ago fell by 50%. Because of the stock split, their input cost was already 10% of the total cost. The bonus share issue reduced their cost price to 5% of their actual purchase price. Due to the 10:1 stock split and 1:1 bonus shares announcement, the actual cost of one Titan share for such investors came down to 0.15 apiece.
As a result, long-term investors who purchased Titan Company shares 20 years ago for $3 per share now pay $0.15 per share thanks to the 10:1 stock split and 1:1 bonus shares announced in June 2011. Titan share price has risen from 0.15 to 2,535 per share, logging 16,900 times in the last two decades for such long-term investors.
If an investor had invested one lakh rupees in Titan Company shares twenty years ago at a price of three rupees, the amount would have increased 16,900 times (2535/0.15), amounting to 169 crore in the last two decades.