Monthly Archives: August 2010

Power of Investment: Wipro

After reading a related email I was just going through the stock of Wipro and got unbelievable impressive figure for long term investment.

Wipro was founded in 1941 with 17000 equity shares and incorporated in 1945. As the base price or face value per share price used to be Rs 100 at that time so considering the premium of Rs 80 the share price must be Rs 180 approximately. Also there used to be norm for minimum subscription of 100 units at a time so you need minimum 18000 Rupees for this subscription. Please note that Rs 18000 is a huge sum in 1980.

Now luckily lets say your father had that much money in 1980 and invested in Wipro stocks and forgets it for 30 years. til 2010 Just see what could have happened to that investment in all those years:
Considering all the bonuses and stock splits in last 30 years for Wipro:

Face Value BONUS Year Ratio Initial 100 shares
100 BONUS 1981 “1 : 1” 200
100 BONUS 1985 “1 : 1” 400
10 SPLIT 1986 “10 : 1” 4000
10 BONUS 1987 “1 : 1” 8000
10 BONUS 1989 “1 : 1” 16000
10 BONUS 1992 “1 : 1” 32000
10 BONUS 1995 “1 : 1” 64000
10 BONUS 1997 “2 : 1” 192000
2 SPLIT 1999 “5 : 1” 960000
2 BONUS 2004 “2 : 1” 2880000
2 BONUS 2005 “1 : 1” 5760000
2 BONUS 2010 “2 : 3” 9600000

So initial 100 shares of 1980 could have been 9600000 shares in 2010.

Current stock price of Wipro is Rs 433 (on 6 Aug 2010). So the total price of 9600000 shares: 4156800000 i.e. INR 415 crore. wow just amazing 🙂

Also as Wipro recently declared dividend of Rs 300 on the face value of Rs 2 i.e. Rs 6 per share, so only dividend earning for 9600000 shares for year 2010 could be: Rs 57600000 i.e. 5 crore 76 lakhs. Probably you or your children don’t need to work anymore and can thank everyday for your ancestor’s thought in 1980. 🙂

By the way if this blog information is correct then there is one lucky person who earned such benefits.

Now if someone had bought 100 shares in 1990 then it could have been compounded to 60000 shares. Its value on 6th Aug 2010 with the per share price of Rs 433 could be Rs 25980000 i.e. 2 crore 59 lakhs and dividend earning for year 2010 could be 360000. Still a good deal in 1990 for lucky ones.

If an investor had invested for 100 shares in year 2000. (Note: It was very costly in year 2000 with the price range of 2700-2800 on 1 Jan 2000) It could have been compounded to 1000 shares in 2010 and its value on 6th Aug 2010 with the per share price of Rs 433 could be Rs 433000 and dividend earning for year 2010 could be Rs 6000. Not a worthy investment in 2000 as its just doubling your money in 10 years which even any saving schemes could have done in less than 10 years.

Now think of your future after 20 years and let me know one such stock 🙂

Happy Investing !!

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