Reliance Industries Ltd. (RIL) recently announced a 1:1 bonus share issue, which will start trading on the stock exchange during the Diwali Muhurat trading session, marking the beginning of Samvat 2081. This announcement follows the allocation of 6.76 billion bonus shares on October 29. Here’s everything you need to know about this bonus issue and what it means for Reliance shareholders.
Understanding the 1:1 Bonus Share Issue by Reliance Industries
In September, Reliance Industries Ltd., led by Mukesh Ambani, declared a 1:1 bonus share issue. This means every Reliance shareholder will receive one bonus share for each share held. The record date for eligibility was October 28, 2024, meaning all shareholders with RIL shares in their demat accounts by this date qualify for the bonus shares.
Trading of Bonus Shares to Begin on November 1
The Bombay Stock Exchange (BSE) confirmed that these new shares would be available for trading from November 1, 2024. The trading session for these bonus shares will occur during Diwali’s special Muhurat session, which is considered a favorable time for financial transactions in India.
What is a Bonus Share Issue and How Does it Work?
A bonus share issue is a corporate action where a company distributes additional shares to existing shareholders without any cost. For example, if you own 100 shares of Reliance Industries, a 1:1 bonus issue would give you an additional 100 shares, doubling your total holdings in the company. This increases the company’s share capital but does not affect its market capitalization.
Why Does Reliance Issue Bonus Shares?
Reliance Industries has a history of rewarding its shareholders through bonus issues, and this marks its sixth such issuance since listing and the second within the last decade. By offering bonus shares, Reliance aims to attract further investments, reward existing shareholders, and enhance the company’s share capital. This strategy often reflects a company’s confidence in its growth trajectory and strong financial health.
Implications of the Bonus Share Issue for RIL Investors
For investors, the bonus share issue does not alter the value of their total investment in Reliance. Although the number of shares each shareholder holds will double, the price per share will adjust to reflect this increase, thus maintaining the company’s overall market capitalization. This action is purely a means of redistribution rather than an increase in asset value.
Reliance’s Performance Ahead of Bonus Share Trading
On the trading day before the Muhurat session, Reliance shares closed at Rs. 1,332.60. According to BSE analytics, Reliance’s shares have shown varied performance recently, with a negative return of 11.46% over the past month but a positive return of 16.46% over the past year. Investors may consider these trends when evaluating their portfolios.
Key Takeaways for Reliance Shareholders
Reliance shareholders will enjoy a proportional increase in shares but should note that the bonus issue does not affect the company’s fundamental value. Here are a few essential points to remember:
- Eligibility: Shareholders who held RIL shares in their demat accounts by October 28 qualify for the bonus shares.
- Trading Start Date: The bonus shares will be available for trading on November 1, during the Diwali Muhurat session.
- Market Impact: The market capitalization of Reliance remains unchanged, but the share price adjusts to accommodate the additional shares in circulation.
Final Thoughts on Reliance Industries’ Bonus Share Announcement
Reliance’s 1:1 bonus share issue reflects the company’s commitment to rewarding its loyal shareholders while attracting new investors. This action coincides with Diwali, a festival associated with prosperity and growth, further emphasizing the company’s commitment to its stakeholders.
(Disclaimer: This information is for informational purposes only and should not be considered investment advice.)
