Reliance declares 1:1 Bonus and Rs.13 Dividend

ril For those who thought that days are gone for this once evergreen stock , it’s time to be taken aback. Reliance Industries has added to the diwali celebrations of its shareholders by announcing a combo of a liberal 1:1 Bonus issue (after a gap of 12 years) and Rs. 13 per share dividend.

 

What does this Bonus means for Reliance Shareholders ?

  • The Bonus issue is an attempt by Reliance Industries to instill confidence in the shareholders towards the tradition of this company to bestow Investor friendly measures.
  • Bonus Issues doesn’t change anything in terms of Financial performance & fundamentals of the company and hence is EPS neutral. However, it does have an indirect impact in terms of improving the sentiments for the stock and brings in more liquidity. Historically , we have seen run up in the stocks after Bonus announcements and stocks have given better returns post Bonus adjusted prices. So, essentially, it is a sentiment booster measure.
  • The timing cannot be more right for the company to announce a bonus as the stock price of reliance Industries has been a laggard as compared to sensex performance due to the ongoing tussle between Mukesh Ambani and his younger brother Anil Ambani over the Gas supply pact. The Bonus issue will provide some impetus to the investor sentiments which was clouded by the ongoing dispute.
  • The Bonus issue has been on account of two major milestones achieved by the company i.e., successful commencement of Gas production from its KG6 Basin and building of new refinery at reliance Petroleum.
  • The Bonus issue is also applicable to shareholders of Reliance Petroleum shares pursuant to recent amalgamation of the company with RIL. The company has fixed Record date of 29th September for reckoning the members entitled to receive 1 Share of Reliance Industries for every 16 Shares held in Reliance Petroleum.
  • The Record date for Bonus has not been announced yet.

23 comments:

javed said...

what is the record date for bonus issue?

chetan said...

Hi Rajesh,
The current dispute with ADAG is not over yet and the outcome is nearly uncertain. In addition the company has over Rs.40,000 crore of treasury stock which it can sell to generate cash for its operations. These factors will continue to create problems for the stock...Is it still advisable to buy Reliance Industries or is ONGC a better bet ? What do you suggest ?

Anonymous said...

Reliance Q1 Results

Turnover decreased by 22.6% to Rs. 33,309 crore (US$ 7.0 billion)
• Exports decreased by 38.5% to Rs. 17,433 crore (US$ 3.6 billion)
• PBDIT increased by 4.3% to Rs. 6,623 crore (US$ 1.4 billion)
• PBDIT Margin increased from 14.7% to 19.9%
• Profit Before Tax decreased by 5.1% to Rs. 4,650 crore (US$ 971 million)
• Cash Profit remained flat at Rs. 5,488 crore (US$ 1.1 billion)
• Net Profit decreased by 11.5% to Rs. 3,636 crore (US$ 759 million)
• Gross Refining Margin at US$ 7.5 / bbl for the quarter ended 30th June 2009
• Net Debt to Equity is 0.24 as on 30th June 2009

Anonymous said...

RIL’s new rankings in the 2009 list of Global Fortune 500 Companies across various
parameters were as follows:
o Rank 264 based on Sales
o Rank 117 based on Profits

FinWin said...

I guess lot has been said about timings of the announcement and impending court case. But no one has mentioned that board meeting has been postponed twice, once a day after the expect court hearing in September which itself got rescheduled and second time to 7th Oct.

So guess RIL probably wanted to make this announcement after court case but not to be. Also with merger of RPL into RIL it has added quite a bit to reserves. Looks like management is hopeful of servicing enlarged equity base. Definitely a plus on bonus announcement.

Going ahead company has multiple triggers to create value like demerger of retail, E&P business etc. Not to forget possible splits.

Touch wood..

vishal said...

all thats great but as matter of fact the shareholder gain nothing from bonus share as the price of share turns half of present . the liquidty that will be generated would help reliance in sale of further treasury stocks in it book
i think its all non -sense

FinWin said...

Agreed fundamentally nothing changes. But sentiment is one of the pillars of stock market if they improve it impacts PE of a company. Besides it shows confidence of the management in business and readiness to serve enlarged equity base.

Thus Bonus is always refered to as rewarding. Just don't count in terms of prices it question of value which will obviously get reflected once the sentiments improve.

Anil Kumar said...

Both brothers are making fool of the shareholders :(

mukesh said...

Anil,
Please get your facts right. Both brothers have given shareholders more than what theie father have given. If you dont agree , check the value of reliance group shares before and after the breakup.

Chetan, you are absolutely right. Problems have not ended for RIL and I have atually sold some of my holdings.

Finwin, you are right in saying that sentiments will improve but this is more of short term impact.

Anonymous said...

Can anybody calculate the intrinsic value of reliance share please ?

FinWin said...

@Mukesh

Point taken

Anonymous said...

Please share the SOTP valuation of Reliance Industries

mukesh said...

Anonymous,

Good question. But it's not everybody's cup of tea. I did a search and found a research report by KR choksey (dated 15th June,09). It has provided SOTP valuations for various business :
Petrochemical : 257
refining : 799
KG6 740
PMT 106
E&P Upside 305
Retail 32
Treasury shares 225
Total EV 2463
Less Debt -213
SOTP Value 2250

Anonymous said...

WHAT IS THE RECORD DATE OF RELIANCE INDUSTRIES. & WHAT IS THE SYSTEM OF GIVING BONUS.

mukesh said...

Record date has not been announced yet.

dixit said...

update plz????????????????????????????????????

niftybullz said...

hai admin this is very nice information for me..i didnt read this before...I forward ur blog to all of my friendss…now i got some
idea about this...thanks for sharing...please visit my blog in that i too have some useful
informations..
http://www.niftybullz.com/
HI TECH LIVE INTRADAY NIFTY AND EQ CALLS and get free trials..Visit my blog...]

Kitchen Sinks said...

Thanks for sharing...good work..please keep i tup on regualr basis.

gallery802 said...

Reliance is one of the top most brands....good...good market value

Forex autopilot said...

Well the two biggies i.e. Anil and Mukesh have joined hands to resolve the gas business issue. The coming time they would kill the market and leave no space for anyone else to compete in this arena.

Anonymous said...

Easy Earning money in online never been this easy and transparent. You would find great tips on how to make that dream amount every Day.Sitting in the home earn around $100 perday. So go ahead and click here for more details and open floodgates to your online income. All the best.

Thanks.

http://j2z.com/xml said...

Hifriends,forex for beginners some useable offers. in recent blog http://j2z.com/xml

Blogger said...

Sprinter - Function One (160BPM)