Saturday, August 16, 2008
Power of compounding - Stocks Investment
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How much can you make in 25+ years by just investing Rs.10,000 initially in any of financial instruments ?
Let us look at the real time 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 ? 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.+
If you think the above is not possible then read on…
A Chartered Accountant by profession Mr. Rakesh Jhunjhunwala is a name today on every Indians mind. He is often termed as Warren Buffet of India by many. His name catapulted into fame when Forbes, in 2007, ranked him as the 51st richest man in India. Son of an income tax officer late Shri. RadheShyam Jhunjhunwala, he started investing in stocks while in college. Rather than take a job, he started investing, with around an initial capital of Rs.5000 in 1985 when the BSE Sensex was at 150. His privately owned stock trading firm Rare Enterprises, the name derived from first two initials of his name and wife Rekha's name.
| NAME OF COMPANY | SHARES HELD (as on 30/06/08) | APPROX (as on 5/08/08) | VALUE (Rs.in crores) |
| TITAN INDUSTRIES | 39,85,756 | 1277 | 508.98 |
| PRAJ INDUSTRIES | 1,33,76,624 | 188 | 251.48 |
| LUPIN LTD | 27,52,135 | 753 | 207.24 |
| CRISIL | 5,50,000 | 3631 | 199.70 |
| NARAGJUNA CONSTRN | 1,24,50,000 | 134 | 166.83 |
| BILCARE | 20,25,000 | 640 | 129.60 |
| PUNJ LLOYD | 50,40,000 | 291 | 146.66 |
| PANTALOON RETAIL | 23,30,895 | 353 | 82.28 |
| KARUR VYSYA BANK | 24,94,073 | 348 | 86.79 |
| BHUSHAN STEEL | 8,20,000 | 922 | 75.64 |
| GEOJIT FINANCE | 1,80,00,000 | 43 | 77.40 |
| PROVOGUE INDIA | 3,80,000 | 850 | 32.30 |
| GARWARE WALL ROPE | 5,00,000 | 86 | 4.30 |
| PRIME FOCUS | 8,82,500 | 460 | 40.59 |
| VICEROY HOTELS | 47,50,000 | 51 | 24.22 |
| INFOMEDIA INDIA | 15,06,062 | 155 | 23.34 |
| AGROTECH FOODS | 17,03,259 | 126 | 21.46 |
| ZENOTECH LABS | 11,50,000 | 113 | 12.99 |
| MID-DAY MULTIMEDIA | 22,50,000 | 26 | 5.85 |
| ION EXCHANGE | 5,00,000 | 153 | 7.65 |
| ZEN TECHNOLOGY | 5,00,000 | 164 | 8.20 |
| ALPHAGEO | 1,25,000 | 413 | 5.16 |
| JB CHEMICALS | 10,81,650 | 47 | 5.08 |
| AUTOLINE INDUSTRIES | 12,11,622 | 182 | 22.05 |
| MRO TEK | 5,70,834 | 51 | 2.91 |
| HIND OIL EXPLOR | 61,00,666 | 136 | 82.97 |
| TOTAL VALUE OF PORTFOLIO – Rs. 2231.67 crore. | |||
This post was written by: Franklin Manuel
Franklin Manuel is a professional blogger, web designer and front end web developer. Follow him on Twitter
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