TCS IPO: Tata Consultancy Services turn ₹5,950 of allottees into ₹1.27 lakh in 20 years of share listing

TCS share price: As Rome was not built in a day, a stock market investor can only become rich after a while. It is often said that money is not in buying and selling stocks but in waiting. This rule also applies to an IPO (Initial Public Offering) investor. If an IPO investor is convinced about a company's business prospects, then irrespective of size, one should stick with one's conviction and hold the stock as long as possible. A stock split is a corporate action that increases the number of a company's outstanding shares by dividing each share and reducing its price. This does not affect the company's market value but makes the stock more affordable for smaller investors.

An IPO investor is advised to keep the scrip as long as possible to create wealth on the premium that promoters of the company have offered to its investors in the primary market. So, by holding a stock for a long term after share allocation, an allottee enjoys the benefit of wealth creation. By having a stock for the long term, they want the benefit of various other rewards like dividends, bonus shares, stock splits, buybacks of shares, etc., which helps an IPO allottee in wealth compounding.

To truly grasp the potential for wealth creation through long-term investment, let's delve into the inspiring journey of Tata Consultancy Services Ltd. On the weekend, shares of Tata Consultancy Services (TCS) Limited completed 20 years of listing in the Indian stock market. According to the TCS share price history, the initial public offering (IPO) of Tata Consultancy Services Limited was launched in July 2004 and listed on the BSE and NSE on 25 August 2004.

TCS IPO was launched at a fixed price of ₹850, and one lot of TCS IPO comprised seven company shares. So, the minimum investment of TCS share allottees who got a share through the share allocation process was ₹5,950. TCS share price today is around ₹4,550 apiece on the NSE. However, there is a catch. The Tata Group company declared bonus shares twice in these two decades of its journey.

TCS bonus shares history

According to the information available on the BSE, TCS shares were traded ex-bonus on two separate occasions post-listing. On 16th June 2009, TCS shares traded ex-bonus to finalise the list of beneficiary shareholders for the issuance of 1:1 bonus shares. Likewise, TCS shares were traded ex-bonus on 31st May 218 for the issuance of 1:1 bonus shares. This means an allotee who remained invested in TCS shares after getting company shares via the share allotment process, its shareholding in the stock surged four times after the issuance of bonus shares in a 1:1 ratio on two occasions. So, the net shareholding of an allottee would have surged to 28 (7 x 8) after availing the benefit of 1:1 bonus shares.

Impact of bonus shares

The TCS share price today is around ₹4,550 apiece. If an allottee had remained invested in TCS shares until date, the absolute value of one's investment would have become ₹1,27,400 ( ₹4550 x 28). So, TCS shares have turned ₹5950 of an allottee into ₹1.27 lakh in the last two decades of its share listing.

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