Small-cap stock turns ₹1 lakh into ₹50 lakh in 15 years on 1:10 stock split


A long term stock investor enjoys some additional benefits over a short term investor because listed companies reward their long term investors in the form of interim or final dividend, stock split, buyback of shares, bonus shares, etc. At once, these rewards that a listed company give from its reserves may not attract a short term investor but when we look at the impact of these rewards, then we would know how beneficial it is to follow ‘buy, hold and forget’ strategy while investing in stock market.

One of the glaring examples as to how a stock split can impact a long term investor’s money is Global Capital Markets shares. These shares were available at around 6.50 apiece levels on BSE in November 2007. And after end of Tuesday session, this small-ap stock was quoting 32.80 on BSE. So, the stock has ascended to the tune of 400 per cent in these near 15 years. However, there is a catch that we need to look at. In November 2010, this small-cap stock has traded ex-split as it declared stock sub-division in 1:10 ratio. 

Impact of 1:10 stock split 

If an investor had invested 1 lakh in this small-cap stock in November 2007, he or she would have got around 15,384 shares. After stock split in 1:10 in 2010, the shareholding of the investor would have surged to 1,53,840 as one’s one share was sub-divided into 10 shares.

As Global Capital Markets share price ended on Tuesday at 32.80 apiece on BSE, one’s 1 lakh invested 1 years ago in November 2007 would have grown to 50,45,952 or at around 50 lakh. 

Global Capital Markets news 

The NBFC is in news these days for foraying into the business of bills discounting. The small-cap company informed Indian stock market exchanges about the decision citing, “Members are hereby informed that the Board in its meeting held today, have also discussed of various other avenues for expanding the business. The Board had discussed about getting into the business of Bills Discounting which would be either anchor/shipper lead model or transportation led model. This would be small ticket sized loans ranging from Rs. 2 lakh to Rs. 25 lakh.”

Explaining its plan to diversify its loan portfolio, the small-cap company further added, “The Board is determined to diversify its loan portfolio and concentrate or retail lending so as to have margin expansion of the funds employed. The Board has also discussed about getting into financing against Gold to small retail borrowers which can be called to be a business of “Gold Loan”.

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