In the run-up to the Reliance Industries AGM for the year 2024, the shareholders of the oil-to-telecom conglomerate were rewarded with two pieces of 'good news': the first, the Competition Commission of India approved the Disney+ Hotstar merger with JioCinema, and second, the firm will consider a 1:1 bonus issue at a board meeting on September 5.
The bonus issue will be the first since 2017, when RIL also issued bonus shares in a 1:1 ratio.
"When Reliance grows, we reward our shareholders handsomely. And when our shareholders are rewarded handsomely, Reliance grows faster and creates more value," said Mukesh Ambani, Chairman of Reliance Industries while addressing the shareholders during the 47th Annual General Meeting.
Also Read | Reliance Industries to consider 1:1 bonus shares at September 5 board meeting, stock rises 2%
Vinit Bolinjkar of Ventura Securities said, " The bonus issue is a clear indicator that the firm expects continued earnings growth and wants to reward its shareholders for their loyalty. It will be seen as positive for investors though the move may not move the needle on the firm's market-capitalisation much."
Independent market analyst Ambareesh Baliga concurred, believing that the bonus issue is sentimentally positive for Reliance Industries' stock price. Additionally, while the move will boost optimism surrounding RIL's shares, it will not have any impact on the fundamentals of the overall company.
"By offering a 1:1 bonus, not only do a wider base of investors get access to the stock but it also offers more liquidity in the RIL shares. The increased liquidity and potential for future value appreciation are likely to outweigh any negative impact on the share price," said Amit Goel, Co-Founder and Chief Global Strategist at Pace 360.
"The bonus announced by RIL is highly accretive to shareholders. The move is expected to pave way for accelerated wealth creation for shareholders. The bonus, along with the commentary, strengthens confidence in RIL's expected growth trajectory," noted Nirav Karkera, Head of Research at Fisdom.
On a technical basis, the stock is trading at a neutral make-or-break level. Vinit Bolinjkar sees the RIL counter surging to levels of Rs 3,400 per share, which is an upside of almost 15 percent from the previous close.
"If Reliance Industries manages to close above Rs 3,050, we can expect further upmove. The first hurdle that the stock needs to cross is Rs 3,100, then we can expect it to scale up to Rs 3,200," said Ajit Mishra, Senior Vice President of Technical Research at Religare Broking.
RIL bonus history
The bonus issue announced is the first in seven years. This is only the fifth time the energy giant, which also has interests in retail and telecom has offered bonus shares. It offered 1:1 bonus shares in 1997, 2009, 2017. Prior to that, in 1983, shareholders received three shares for every five they held.
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