RIL declines 6% on profit booking; stock to turn ex-rights on Wednesday

In the past 31 trading days, the stock of RIL has outperformed the market by surging 78 per cent, as compared to a 21.5 per cent rise in the S&P BSE Sensex till Monday

Shares of Reliance Industries (RIL) were down 6 per cent to Rs 1,483 on the BSE on Tuesday on back of heavy volumes on profit booking. The stock will turn ex-rights on Wednesday, May 13.

Since March 23, the stock of the oil-to-telecom conglomerate has outperformed the market by surging 78 per cent, as compared to a 21.5 per cent rise in the S&P BSE Sensex till Monday.

Mukesh Ambani-controlled RIL has fixed May 14 as the record date for the Rs 53,100 crore 1:15 rights issue, which is priced at Rs 1,257 per share. Simply put if you own the stock as on May 14, you will be eligible to participate in the rights issue. For every 15 shares held, the company will offer 1 share. The promoters will participate in, and are committed to, the success of the rights issue, the company had earlier said.

 

Investors will need to pay only 25 per cent of the share price at the time of application and 75 per cent via calls.

"If the shareholding of any eligible equity shareholder is less than 15 equity shares or is not in the multiple of 15 equity shares, the fractional entitlement of such eligible equity shareholder shall be ignored for the computation of the rights entitlement," RIL said in a regulatory filing today. READ HERE

However, the eligible equity shareholders, whose fractional entitlements are being ignored, will be given preferential consideration for the allotment of 1 additional rights equity share each if they apply for additional rights equity shares over and above their rights entitlement, if any, subject to availability of additional rights equity shares in this rights issue, it added.

RIL should see a cash inflow of Rs 75,700 crore by 1HFY21. This includes the investments to be infused by Facebook in Jio Platforms, the upcoming rights issue, the investment by BP in Petroleum retail business and redemption of NCD in RJIPL with the investment in Tower InVit.

 

With the aggressive fund raise, analysts at BOBCAPS believe RIL has enough ammunition to target a major inorganic move that taps into the massive valuation discounts on offer during the ongoing global economic freeze.

"This transaction could be in cyclicals – globally several large integrated cyclical businesses are available at low valuations due to distressed GRMs/petrochemical cracks; E&P – to tap fire sales of any large oil and gas producing company or asset amid low oil prices; retail – many global retail majors could be under bankruptcy proceedings; or telecom/technology," the brokerage firm said in stock update.

At 12:59 pm, RIL was trading 4 per cent lower at Rs 1,512 on the BSE, as compared to a 1.7 per cent decline in the S&P BSE Sensex. The trading volumes on the counter more than doubled with a combined 26.4 million equity shares changed hands on the NSE and BSE till the time of writing of this report.