Reliance bonus issue: Billionaire Mukesh Ambani-led Reliance Industries board approved the bonus issue in the ratio 1:1 on Thursday, September 5, which was announced during the oil-to-telecom conglomerate's 47th annual general meeting (AGM) late in August. The board also approved an increase in authorised share capital from ₹15,000 crore to ₹50,000 crore.
The record date of the bonus issue will be issued separately. Reliance Industries said in a regulatory filing to the stock exchanges on Thursday afternoon, "The Board of Directors of the Company, at its meeting held today, have:
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a. Approved forfeiture of partly paid-up equity shares of the company on which call money (First Call or Second and Final Call or both), remains unpaid. The forfeiture will be effected in case the payment of call money is not made on or before September 20, 2024.
b. Recommended to the shareholders for their approval through postal ballot:
i. issue of bonus shares in the ratio of 1:1 i.e. 1 (one) new fully paid-up equity share of ₹10/- (Rupees Ten Only) each for every 1 (one) existing fully paid-up equity share of ₹10/- (Rupees Ten Only) each, to the eligible equity shareholders of the Company as on the record date, by capitalization of securities premium received in cash and/or general reserve and/or retained earnings;
ii. increase in the authorised share capital of the company from Rs. 15,000 crore to Rs. 50,000 crore. The record date will be intimated separately."
This marks Reliance's sixth bonus issue and the first since 2017. Prior to the bonus issue approved in 2017, Reliance had issued a 1:1 bonus share in 2009.
The bonus shares will be issued by capitalizing from the company's securities premium account, general reserves, or retained earnings. As of today, the company's pre-bonus paid-up capital stands at ₹6,766.23 crore, consisting of 676.62 crore equity shares of ₹10 each, including partly paid-up shares.
After the bonus issue, the paid-up capital will double to ₹13,532.46 crore, comprising 1,353.24 crore equity shares. The company estimates that ₹6,766.23 crore will be required to implement the bonus issue, and the final amount will be based on the paid-up capital on the record date.
Shares of India's largest company by market cap have outperformed the Indian stock market benchmarks, Sensex and Nifty 50, year-to-date (YTD). Till September 4 close, Reliance share price has gained 17 per cent on the BSE this year against a 16 per cent gain in the Nifty 50 and 14 per cent gain in Sensex.
The stock posted gains for the next five consecutive months after reaching a 52-week low of ₹2,221.05 on October 26 last year. This year, it has only declined in April (down nearly two per cent), May (down nearly two per cent), and July (down nearly four per cent). The stock hit its 52-week high of ₹3,217.90 on July 8, before facing profit booking. Currently, it trades seven per cent below its 52-week high.
In a technical note, domestic brokerage JM Financial said, ‘’Quarter to date, the large-cap stock has underperformed the Nifty 50 index by eight per cent. In comparison to NSE 200 weight, mutual funds are underweight in the stock,'' said the brokerage in its note.
All major selling in the stock in the last 10 months has ended marginally below the 100-day EMA levels, which is currently placed at ~2,958 levels. According to the brokerage, the ratio of Reliance Industries over Nifty 50 (currently at 0.1205 levels) is trading closer to post-COVID-19 lows of 0.1159 levels.
It has managed to find support in the range of 0.1159-0.12 levels on multiple occasions in the past four years, suggesting a lower probability of a breakdown happening. ‘’On a four-year data window, the ratio trades at 0.8 standard deviations below the mean levels of 0.1294. It is at its 15 percentiles,'' said JM Financials.
Reliance Industries' consolidated profit after tax (PAT) decreased four per cent YoY to ₹17,448 crore in the April-June quarter of FY25 against ₹18,182 crore in the same quarter last year. The company's consolidated revenue rose 11.5 per cent YoY to ₹2,57,823 crore from ₹2,31,132 crore in the corresponding quarter last year.
The company's consolidated EBITDA for the quarter under review moved up with strong contributions from consumer and upstream businesses, largely offsetting the weak performance of O2C (oil-to-chemicals) segments.
The company's telecom arm, Jio Platforms, witnessed strong growth during the quarter under review. The segment's EBITDA jumped 11.6 per cent YoY to ₹14,638 crore, led by healthy revenue growth and operating leverage.
Experts say Reliance Industries' business growth plans will augur well for the stock. Addressing the company's 47th annual general meeting on August 29, Chairman Mukesh Ambani said the company intends to double its value by the time it completes 50 years of functioning in 2027.
The board announced several projects as part of its digital and artificial intelligence (AI)- led future growth plans. Ambani said the company would launch a suite of AI tools and boost its green energy manufacturing ecosystem.
