Before getting into the details of the bonus and rights issues, let us look at the history of Wipro which has extensively issued bonus and rights to shareholders over the years. Let us start with the unbelievable story of how Wipro created wealth over the years. Had you bought 100 shares of Wipro in 1980 at a price of Rs.100 then your investment of Rs.10,000 would be worth a princely Rs.650 crore today. Of course, we are assuming that you just sat on these shares for 39 years and enjoyed all the bonuses and stock splits. Consider the table below!

Year

Bonus / Split

Ratio of Bonus / Split

Year Beginning shares

Year Ending shares

1980

-

-

0

100 shares (Bought )

1981

Bonus

1:1

100

200

1985

Bonus

1:1

200

400

1986

Stock Split

100 to 10 FV

400

4,000

1987

Bonus

1:1

4,000

8,000

1989

Bonus

1:1

8,000

16,000

1992

Bonus

1:1

16,000

32,000

1995

Bonus

1:1

32,000

64,000

1997

Bonus

2:1

64,000

1,92,000

1999

Stock Split

10 to 2 FV

1,92,000

9,60,000

2004

Bonus

2:1

9,60,000

28,80,000

2005

Bonus

1:1

28,80,000

57,60,000

2010

Bonus

2:3

57,60,000

96,00,000

2017

Bonus

1:1

96,00,000

1,92,00,000

The big question is did bonuses create this wealth or stock splits or both? The answer is that neither of these really created wealth in case of Wipro. What created wealth was that Wipro went from a small vegetable oil manufacturer in 1980 to being one of India’s largest IT players in India. It is this tipping point that created wealth for the shareholders of Wipro. But, bonuses and splits definitely helped along the way because they helped bring the share price of Wipro within affordable range for the stock markets. Otherwise, each share of Wipro would be quoting something like what Berkshire Hathaway quotes today.