Power of Equity

This is an article about how equity power helps to growth of a company. Example analysis of Indian companies in 1984 which had recor the rapid growth for the past 10 years just grab the articles.

Power of Equity

Unbelievable

but it has happened

Just imagine…

How much can you make in 26 years by just investing Rs.10,000 initially in any of financial instruments ?

Take a wild guess ???

Let us look at the real example…

If you have subscribed in 100 shares of ________ company with a face value of Rs. 100 in 1980…

In 1981 company declared 1:1 bonus = you have 200 shares

In 1985 company declared 1:1 bonus = you have 400 shares

In 1986 company split the share to Rs. 10 = you have 4,000 shares

In 1987 company declared 1:1 bonus = you have 8,000 shares

In 1989 company declared 1:1 bonus = you have 16,000 shares

In 1992 company declared 1:1 bonus = you have 32,000 shares

In 1995 company declared 1:1 bonus = you have 64,000 shares

In 1997 company declared 1:2 bonus = you have 1,92,000 shares

In 1999 company split the share to Rs. 2 = you have 9,60,000 shares

In 2004 company declared 1:2 bonus = you have 28,80,000 shares

In 2005 company declared 1:1 bonus = you have 57,60,000 shares

At the end of 2005…

You have 57,60,000 shares of the company

Any guess about the company ?

(Hint : Its an Indian company)

Any guess about the present valuation ?

The result of ‘Power of Compounding’

Your present valuation is about

Rs. 200 Cr.+

&

The company is ‘WIPRO’

Other such examples…

CIPLA

Investment of Rs. 10,000 in 1979 will fetch Rs. 95 cr.+

INFOSYS

Investment of Rs. 10,000 in 1992 will fetch Rs. 1.5 cr.+

RANBAXY

Investment of Rs. 1000 in 1980 will fetch Rs. 1.9 cr.+