RIL's bonus issue an added draw for shareholders invested in a strong growth business

Reliance Industries has proposed a 1:1 bonus issue today.  Since 2000, RIL has declared two bonus issues –in 2009 and 2017.

The previous major corporate action was when RIL completed the biggest equity fundraise in Indian capital markets through a rights issue of Rs 53,125 crore in 2020. Promoters subscribed fully to the rights issue. The huge equity infusion by the promoter group to the tune of Rs 26,500 crore signalled the promoters’ unwavering faith in the long term prospects of its various businesses and also helped the company to reduce its debt.

The promoters – the Mukesh Ambani family- holds a 50.33 percent equity in RIL. Minority shareholders have played a vital role in the growth of its market capitalisation. They bought into the Ambani dream and have also gained with RIL becoming the most valuable company in the country with a market capitalisation of over Rs 20 lakh crore.

RIL has over 30 lakh retail shareholders, one of the largest investor pools in the country. While the bonus issue does not directly impact the company’s valuation, existing shareholders will continue to benefit from the growth of its digital, telecom and retail business along with the traditional business and can also gain from value unlocking of new businesses over next few years. The bonus issue will, of course, lead to a halving of the nominal stock price since it’s a 1:1 issue and, thereby, make investing in its shares accessible to a wider cohort of investors.