Stock To Buy On Janmashtami, August 24; Midcap Turns Rs 20,500 To Rs 3.80 Cr Since IPO Thanks To Split, Bonus

The stock market is open during the celebration of Krishna Janmashtami on August 24, and it brings an opportunity to grab wealth-creating and affordable stocks. One such recommendation is of Samvardhana Motherson International, formerly known as Motherson Sumi Systems. This midcap stock has made an extraordinary journey since its listing in 1993. Engaged in the business of auto components and equipment, Motherson makes many investors rich.

To be precise, Mother has turned 500 shares during its listing day, to a breathtaking over Rs 6.85 crore as of August 22, 2024. How? Let's find out!

The birth of Motherson goes way back to 1975 when Vivek Chaand Sehgal and his mother together developed Motherson Group as a silver trading business. Vivek started Motherson with a mere Rs 1,000 seed funding which he took from his mother. And hence, the strong bond of mother and son, quite literally led to the establishment of 'Motherson'.

Becoming a first-generation entrepreneur, Vivek made key collaborations that took Motherson to new heights. In 1983, Sehgal collaborated with Tokai Electric Co. (now Sumitomo Wiring Systems) which led to the incorporation of Motherson Sumi Systems in 1986.

Motherson Sumi Systems was primarily started as a wiring harness manufacturer for Maruti Udyog and made its debut on BSE and NSE in 1993. This is where, those investors who put faith in Motherson during the listing, would be the biggest winner now if they remained invested in the company. How? The question comes back! This is because of bonus issues and stock splits Motherson has carried since its listing, which makes investors win, and even become crorepati.

In total, Motherson has declared 9 bonuses and carried 2 stock splits since listing. The stock debuted on September 9, 1993, at an opening price of Rs 41 per share with a face value of Rs 10 each. The market cap at that time was Rs 23.8 crore for Motherson.

Now where is Motherson? Listed on BSE and NSE, the stock has a market value of a whopping Rs 1,33,899.38 crore, making it a large-cap. The stock is just a couple of rupees away from its Rs 200 mark. The stock's 52-week high and low are at Rs 208.90 apiece and Rs 86.80 apiece respectively. On BSE, the stock is in the 'A' group. That's an impressive performance, and investors have been blessed too.

It also needs to be noted that Motherson Sumi carried a demerger of itself, Samvardhana Motherson International and Motherson Sumi Wiring India, which came into effect from January 5, 2022.

This led to a reshuffle in the group on BSE and NSE. Post the demerger, the equity share of Motherson Wire Sumi was listed on BSE and NSE, while Motherson Sumi Systems became Samvardhana Motherson International the parent company. The demerger was via a share swap, and hence Motherson's share price also got adjusted in 2022.

So how did investors become crorepati? Let's calculate the gains. EXAMPLE:

On the listing day, if an investor buys 500 shares of Motherson at Rs 41 per share, their investment value will be Rs 20,500.

Now let's use the stock splits and bonus issue benefits, and how the number of shares of investors grew over time.

Motherson has only carried nine 1:2 bonus shares each from November 2000 to October 2022. This means that 1 equity share as a bonus was rewarded to investors on their two existing equity shares during these nine bonuses.

While Motherson has carried two types of stock splits. First, in the ratio of 1:2, the number of shares gets doubled and the face value reduces. The second split was of a 1:5 ratio, which led to the total number of shares rising by 5 times, and accordingly, face value adjusted.

1. November 2000: Bonus Issue of 1:2 - Existing 500 shares got 250 bonus shares (500/2), taking the total number of shares to 750 shares.

2. October 2002: 1:2 Stock Split - 750 equity shares split to 1500 shares (750 X 2).

3. March 2004: 1:5 Stock Split - 1500 shares multiplied to 7500 shares (1500 X 5).

So far this is the last stock split by Motherson. Its face value has been trimmed from Rs 10 each to Rs 1 each due to the two stock splits.

4. February 2005: 1:2 Bonus Issue - 7500 shares get a bonus of 3750 shares (7500/2), taking the total number of shares to 11,250 equity shares.

5. August 2007: 1:2 Bonus Issue - 11,250 get a bonus of 5,625 shares (11250/2), taking the total number of shares to 16,875 equities.

6. October 2012: 1:2 Bonus Issue - 16,875 shares get 8,437.5 bonus shares (16,875/2), taking the total number of shares to 25,312.5 equities.

7. December 2013: 1:2 Bonus Issue - 25,312.5 equity shares get 12,656.25 bonus shares (25312.5/2), taking the total number of shares to 37,968.75 equities.

8. July 2015: 1:2 Bonus Issue - 37,968.75 equity shares get 18,984.3 bonus shares (37,968.75/2), taking the total number of 56,953.13 equities.

9. July 2017: 1:2 Bonus Issue - 56,953.13 equities get bonus shares of 28,476.56 (56,953.13 shares/2), taking the total to 85,429.68 equity shares.

10: October 2018: 1:2 Bonus Issue - 85,429.68 equities get a bonus of 42714.84 shares (85429.68/2), taking the total number of shares to 1,28,144.53 equities.

11. October 2022: 1:2 Bonus Issue - 1,28,144.53 equities get bonus of 64,072.26 shares (128144.53/2), taking the total number of shares to 1,92,216.79 equities.

If the same investor held Motherson shares till August 22, 2024. Then at the current market price of Rs 197.60 apiece on BSE, the corpus is about Rs 3.798 crore. That would be an eye-bulging 1,85,178.23% gain for investors who have put their money in Motherson since the 1993 listing.