Reliance Industries Bonus Issue: The majority of brokerages have recommended buying India's largest stock, Reliance Industries (RIL) ahead of its bonus issue delivery in the ratio of 1:1. RIL's all-time gains are breathtaking by 12,847%, and the company believes in offering maximum value returns to its investors. Hence, eligible shareholders will get 1 free share on their existing 1 share in Reliance, doubling their portfolio.
Despite the bonus issue announcement and approval from the board of directors for the same, Reliance shares ended the trading week from September 2-6 on a bearish note with a decline of over 3.31% due to market volatility.
After market hours, on Friday, Reliance shares ended at Rs 2,929.85 apiece, down by 1.92% on BSE with market cap of Rs 19,82,282.42 crore. The stock is nearly Rs 300 away from hitting its 52-week high of Rs 3,217.90 apiece.
In a board meeting on September 5, Reliance's board members approved the issue of bonus shares in the ratio of 1:1 i.e. every shareholder holding 1 (one) fully paid-up equity share of Rs. 10/-each on the record date will receive 1 (one) fully paid-up equity share of Rs. 10/- each.
RIL said, " The record date will be separately intimated." That being said, investors will be eligible for a Reliance bonus if they hold the company's shares in their demat account before the record date.
Further, RIL said that this will be the largest-ever issuance of bonus equity shares in the Indian equity market. The issuance and listing of bonus shares will coincide with the upcoming festive season in India and will be an early Diwali Gift to all our esteemed shareholders.
Notably, the upcoming 1:1 bonus issue is the sixth free-shares reward from RIL since its IPO and the second in this Golden Decade. It said, "The bonus issue is a testimony to Reliance's continued commitment towards rewarding shareholders during the Golden Decade from 2017 to 2027."
RIL Bonus Issue History:
Before the upcoming bonus, in 2017, Reliance had issued bonus shares in the ratio of 1:1. This was followed by a Rights Issue in 2020, where shareholder's investment has grown 2.5 times already.
Also, in July 2023, Jio Financial Services Limited was demerged, which is valued 35% higher today from its listing.
BUY/SELL RIL Shares:
RIL said, "Reliance remains committed to its mission of creating all-round value for all its stakeholders in the true spirit of its 'We Care' philosophy in coming years."
In its latest note, JM Financial recommended BUY on Reliance. It said, "At RIL's annual general meeting today (AGM statement and PPT link), the company highlighted its target to double Jio and Retail business revenue & EBITDA in the next 3-4 years; this is largely in line with JMFe as we expect Retail business EBITDA to double in 3.5 years and Digital business EBITDA to double in 4 years. Further, the company guided for the New Energy business to become as profitable in the next 5-7 years as the O2C business (O2C business FY24 EBITDA was INR 624bn) - this provides earnings visibility for the New Energy business and could potentially be significantly value accretive."
Further, JM's note added, " On the Digital business, the company expects 5G penetration to improve and reiterated its ambition to upgrade ~200mn 2G subs and connect 100mn homes & 20mn MSMEs via its FTTH/AirFiber services. Further, it emphasised on RIL Retail's robust growth outlook driven by its strong omni-channel capabilities and strengthening consumer brand business. The company reiterated its O2C expansion plans for investing in various existing and new petchem chains (at earlier guided capex of INR 750bn)."
Additionally, the brokerage said, it restated its INR 750bn New Energy capex commitment and project timeline. However, no timeline was shared on potential listing of the Digital and Retail businesses.
On the valuation, JM's note added, "We maintain BUY (unchanged TP of INR 3,500/share) on RIL as we believe peak capex/net-debt is behind it, and also because the company has industry leading capabilities across businesses to drive robust 16-17% EPS CAGR over the next 3-5 years."
Click it and Unblock the Notifications
Sign in with Google