1:10 stock split: Defense stock gives 350% return to allottees in six years

Stock split: Defence stock traded ex-split on 4th may 2023 in 1:10 ratio

Multibagger defence IPO was launched in January 2018 at a price band of ₹270 to ₹275 apiece and the mainboard issue listed on BSE and NSE at a premium of near 70%.

Stock split impact: Investing in the stock market is like investing in a business. Hence, most of the successful stock market investors advised investors to remain invested in a stock as long as they can. This idea holds well on all types of stocks irrespective of their size. This idea can be applied to IPOs as well because a long-term investor not just gains from the listing premium but from various rewards that the company declares post-listing. These rewards include bonus shares, stock splits, buyback of shares, dividends, etc.

Apollo Micro Systems IPO journey

To understand how these rewards may impact on one’s investment in the primary market, one needs to look at the journey of Apollo Micro Systems IPO. The bookbuild issue was launched in January 2018 at a price band of ₹270 to ₹275 apiece. the public issue was proposed for listing on BSE and NSE.

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The public issue was listed on the BSE at ₹478 apiece whereas it listed in the NSE at ₹465 per share level, delivering to the tune of 70 percent listing gain to the lucky allottees. However, the defense stock didn’t stop here post-listing. It further forced company promoters and the board of directors to go for a stock split.

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Stock split history

As per the information available on the BSE website, the defense stock traded ex-split on 4th May 2023 for the subdivision of shares in a 1:10 ratio. As the Apollo Micro Systems IPO size comprised 50 shares of the company, if an allottee had remained invested in the scrip to date, its shareholding in the company would have risen 10 times.

Assuming an allottee’s shareholding in the company at one lot level, then is net shareholding in the company after the stock split in 1:10 ratio would have turned to 500 shares (50 x10).

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Impact on investment

Apollo Micro Systems share price ended on NSE at ₹124 apiece on Friday. So, if an allottee had remained invested in this defense stock to date despite a strong listing premium, the absolute value of one’s investment would have turned to ₹62,000 ( ₹124 x 500). As the Apollo Micro Systems IPO lot size was 50 and the Apollo Micro Systems IPO price band was ₹270 to ₹275 per equity share, the minimum investment of an allottee would have been ₹13,750 ( ₹275 x 50).

Therefore, if an allottee had remained invested in this defense stock till tade without any interruption, its ₹13,750 would have turned to ₹62,000, logging around a 350 percent rise in one’s money.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 03 Feb 2024, 02:33 PM IST