A Patient Investor
Let's meet Mr.Chandu, a long-term investor who bought 100 shares of Reliance Industries in 1977. Fast forward to today, and Mr. Chandu's holdings have grown to a remarkable 1280 shares with a market value of around Rs. 35-40 lakhs. But the story doesn't end here.
The Bonus Bonanza
Reliance Industries has a history of rewarding its loyal shareholders with bonus issues. If the company's board approves the proposed 1:1 bonus issue on September 5th, Mr.Chandu's 1280 shares will magically transform into 2560 shares. With the current share price hovering around Rs. 3000, you might think that Mr. Chandu's investment would be doubled, worth well over Rs. 75 lakhs (Rs.3000 * 2560 shares) ! But wait! A bonus issue does not double your wealth. After a bonus, the share price adjusts itself and corrects by the bonus amount, at least theoretically. So, assuming the stock corrects 50% (because it is a 1:1 bonus), the value of Mr.Chandu’s holding would still be the same Rs. 35-40 lakhs.
However, Mr.Chandu isn't disheartened. He understands that bonus issues can offer benefits beyond immediate financial gains. Increased liquidity and the positive sentiment among investors can be advantageous for both Reliance Industries and its shareholders like Mr.Chandu.
CAGR and Dividends
Over the years, Reliance Industries has delivered a consistent Compound Annual Growth Rate (CAGR) of around 19%, where the broader market indexes like Nifty deliver around 12-13%. This impressive performance is a testament to the company's sound business strategies and strong leadership.
In addition to capital appreciation, Mr.Chandu has also received a significant amount of dividend income over the years. Approximately Rs. 1,35,600 has been added to his investment kitty through dividends alone.
The Power of Patience
Mr.Chandu's story is a powerful reminder of the long-term benefits of investing in quality stocks. By staying patient and holding onto his Reliance shares through thick and thin, he has reaped substantial rewards.
Conclusion
Reliance Industries has not only been a financial success story but has also played a pivotal role in India's economic growth. For investors who have been part of this journey, the rewards have been truly bountiful.
Remember: This blog post is for informational purposes only and does not constitute financial advice. It's always recommended to consult with a financial advisor before making any investment decisions.
