Incredible Infosys: From Undersubscribed to 16,35,066% Returns
If you had invested ₹9,500 in Infosys way back in 1993, then you could have had a whopping ₹15.53 crore in profits! Let’s take a look at this stock’s eventful journey through the years.
💻 Stock Name: Infosys Ltd.
💻 NSE: $INFY
🛑 An Undersubscribed IPO
IT giant of India, Infosys, is one of those stock breeds that has bestowed its investors with astounding returns. It is the second-largest IT company in India in terms of market cap and crossed the $100 billion mark in 2021. But did you know that when its IPO was launched in February 1993, it hardly attracted investors?
🌟A Blessing In Disguise For Underwriters
As part of their desperate efforts, the company reached out to several high-net-worth individuals, including the late V.G. Siddhartha (Founder of CCD ☕). Enam Securities, the merchant banker run by Vallabh Bhansali, who had already invested a small amount in the company in 1992, played an important role in the eventual success of the issue. As the underwriters of the issue, the firm picked up the unsubscribed portion, some of which they were able to later place with key investors. That’s how Morgan Stanley, one of the underwriters, made one of its smartest investment decisions by picking up 13% of the equity.
📊 The Math Behind The Aftermath
If an investor had picked up 100 shares of the company in 1993, with a capital of ₹9500, it would now be worth ₹15.53 crores. Here’s a breakdown of the math behind this astronomical figure 👇🏽
▪️ 1993: IPO issued
▪️ 1994: Declared a 1:1 bonus. The 100 shares ➡️ 200
▪️ 1997: Declared another 1:1 bonus ➡️ 400 shares
▪️ 1999: Declared another 1:1 bonus ➡️ 800 shares
▪️ 1999: The stock split ➡️ 1600 shares
▪️ 2004: Declared 3:1 bonus ➡️ 6,400 shares
▪️ 2006: Declared 1:1 bonus ➡️ 12,800 shares
▪️ 2014: Declared 1:1 bonus ➡️ 25,600 shares
▪️ 2015: Declared 1:1 bonus ➡️ 51,200 shares
▪️ 2018: Declared 1:1 bonus ➡️ total share count grew to 1,02,400
Multiplying this figure with the current market price of ₹1517.20 (as of 28 July 2022), the ₹9500 invested in 1993 brings it to ₹15,53,61,280! Thus, it is no surprise that market experts often refer to the Infosys rally when describing the magic of compounding to novice investors.