Synopsis : Tata Consultancy Services (TCS) turned an initial investment of Rs5,950 during its 2004 IPO into Rs1.27 lakh over 20 years, demonstrating the power of long-term investing and the benefits of holding quality stocks.
Tata Consultancy Services (TCS), one of India's leading IT companies, has shown the tremendous wealth-building potential of long-term investment. As the adage goes, "Rome wasn't built in a day," and similarly, wealth creation in the stock market often requires patience and perseverance. This principle holds particularly true for IPO (Initial Public Offering) investors, who can reap significant rewards by holding on to their investments over the long haul.
An IPO investor is often advised to maintain their investment as long as possible to maximize returns, especially when convinced of the company's strong business prospects. Holding onto a stock beyond the initial euphoria of listing can lead to compounded wealth through various corporate actions such as dividends, bonus shares, stock splits, and share buybacks.
The journey of Tata Consultancy Services (TCS) on the Indian stock market is a prime example of this strategy. Launched in July 2004, TCS's IPO was priced at Rs850 per share, with a minimum lot of seven shares, requiring an initial investment of Rs5,950. Since then, TCS has grown exponentially, with its share price now hovering around Rs4,550 per share.
However, this growth story doesn't end with the appreciation of the stock price alone. TCS has rewarded its long-term shareholders by issuing bonus shares twice during its 20-year journey. On June 16, 2009, and May 31, 2018, TCS shares traded ex-bonus, offering a 1:1 bonus on both occasions. This means that an investor who initially purchased seven shares through the IPO would now hold 28 shares (7 original shares x 4 after two 1:1 bonuses).
Considering the current share price of Rs4,550, the initial investment of Rs5,950 has now grown to Rs1,27,400 (Rs4,550 x 28 shares). This remarkable growth highlights the potential of long-term investing, particularly in a company with strong fundamentals and consistent performance like TCS.
Disclaimer: The views and recommendations above are those of individual analysts or broking companies. We advise investors to check with certified experts before making any investment decisions.
