What premium will Reliance rights issue list at on Friday?

KS Badri Narayanan Chennai | Updated on June 11, 2020

File   -  REUTERS

Promoters, FPI stakes go up, while retail investors, MFs reduce holdings


Shares of partly-paid Reliance Industries’ rights issue will be listed on the bourses on Friday. RIL has alloted 42.24 crore equity shares to eligible equity shareholders at ₹1,257 a share. About 1.87 lakh rights equity shares have been kept in abeyance by the company, pursuant to an order passed by the Special Court constituted under the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992, it said in a notice to the stock exchanges.

Reliance had successfully closed its biggest ever ₹53,124-crore rights issue (42.26 crore shares) on June 3 after receiving strong response from its shareholders. The entitlement ratio had been pegged at 1:15 (i.e. one equity share for every fifteen shares held) for shareholders as on May 14 (record date).

The rights equity shares were issued as partly paid-up and an amount of ₹314.25 a share.

For the first time, shareholders were allowed to trade their rights entitlement (RE) on a stock exchange platform, as SEBI had earlier this year tweaked the rules to allow RE shares to trade. Reliance Industries’ RE surged over 40 per cent in seven trading sessions on the special platform, on May 29 at around ₹223. The rights entitlement trading window had opened on May 20.

According to analysts, if one were go by the current market price at the exchanges, RIL-(partly-paid) shares may open between ₹650 and ₹725.

The price for the partly paid-up Reliance rights shares will largely be a function of the underlying stock price, remaining dues and the time left for payment of remaining dues. However demand and supply may at times end up distorting the relationship, said Jyoti Roy, DVP Equity Strategist, Angel Broking Ltd.  "Based on current market price of ₹1,540 and discounting the present value of the remaining dues at a risk free rate of 5 per cent the intrinsic value of the partly paid up rights issue comes to ₹656. However the actual listing price could be different from the intrinsic value initially as price discovery may take some time," he added.


50,000 retail investors quit

According to the shareholding post right issue, promoter holding increased marginally to 50.29 per cent (from 50.07 per cent). Among the public, FPI holding moved up to 24.71 per cent (24.05 per cent), while that of mutual funds decreased to 5.37 per cent (5.42 per cent) and LIC to 6 per cent (6.01 per cent).

Interestingly, about 51,000 small retail investors exited Reliance Industries. Currently, about 24.90 small retail investors hold 7.55 per cent stake, against 25.41 lakh investors who had held 7.94 per cent stake. Qualified institutional buyers’ holding too fell to 1.78 per cent (2.03 per cent).

The company intends to utilise the net proceeds from the rights issue to pay ₹39,755 crore debt; Of that, ₹13,193 crore will be paid as first instalment.

Shares of Reliance Industries slipped 1.5 per cent at ₹1,547.90 on the BSE in morning trade.

Published on June 11, 2020

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