Billionaire Mukesh Ambani-owned Reliance Industries' Rs 53,124 crore rights issue has received good response from shareholders ahead of its closing on June 3.
The issue has been subscribed 1.07 times, receiving a subscription for 45.47 crore equity shares against 42.26 crore shares on offer.
The company received 61.69 lakh bids in the non-ASBA segment till 14 hours IST.
Reliance Industries Rights Entitlement had on May 29 closed at Rs 223 per share, up 7 percent over its intrinsic value on same day. It was up 41 percent from its listing price of Rs 158 on May 20 and nearly 47 percent from its closing price before the listing.
Intrinsic value is the difference between Reliance Industries share price and the rights issue price. The issue priced at Rs 1,257 per share, opened on May 20 for its shareholders.
Reliance Industries enjoys support of a very large number of shareholders. It has over 25.4 lakh retail shareholders. Over 1,700 institutional investors – domestic as well as foreign – are invested in the company.
The strong subscription numbers indicate the high level of confidence every category of shareholders has in the company’s future. "We have been advising shareholder/investors to exercise their right and 'subscribe' to the issue offered by RIL. We advise remaining invested in the stock for at least two-to-three years," Prashanth Tapse, AVP Research at Mehta Equities, told Moneycontrol.
"Investors should also look at factors such as growth prospects and the reason behind the company's decision to come out with a rights issue and so on. We believe that the telecom and retail business will be key growth drivers for the company over the next few years, while the company’s foray into e-commerce through its JioMart platform will be a value creator for the shareholders in the long run," he said.
This is the first rights issue from Reliance Industries in nearly three decades. The rights issue ratio is in a 1:15 ratio i.e. one rights share for every 15 equity shares held by shareholders.
To make the issue friendlier for retail investors, the rights issue price of Rs 1,257 is to be paid over 18 months in three instalments – 25 percent (Rs 314.25) on application by June 3, 25 percent (Rs 314.25) in May 2021 and balance 50 percent (Rs 628.50) in November 2021.
After the first instalment, shareholders who participated in the issue, will get partly paid-up rights shares by June 11 and the same partly paid-up rights shares will list on bourses on June 12.
Disclaimer: "Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd which publishes Moneycontrol."
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