Summary:
Reliance Industries Limited (RIL) has announced October 28, 2024, as the record date for its upcoming 1:1 bonus share issue. This means shareholders holding RIL shares at the close of trading hours on October 28th will be eligible to receive one additional share for every share they own. This move, initially announced during the company’s 47th Annual General Meeting (AGM) in August, received overwhelming shareholder approval (99.92% in favor) in September. The bonus shares will be issued out of the securities premium account, general reserve, and/or retained earnings available as of March 31, 2024. This corporate action will effectively double the number of outstanding RIL shares and increase the company’s authorized share capital from ₹15,000 crore to ₹50,000 crore.
Key Insights:
Focus: The primary focus is on rewarding existing shareholders and increasing the stock’s liquidity. Bonus shares increase the number of outstanding shares, potentially making them more affordable for smaller investors.
Key Event: The record date of October 28, 2024, is the crucial date for investors to be eligible for the bonus shares.
Potential Impact: Increased liquidity may lead to higher trading volumes for RIL shares. The bonus issue could also attract new investors, potentially driving up demand and price in the short term. However, it’s important to remember that fundamentally, the company’s value remains the same, and the bonus issue essentially splits the existing value over a larger number of shares.
Investment Implications:
Historical Trends: Historically, bonus issues often generate positive market sentiment, at least in the short term. However, long-term performance still depends on the company’s underlying fundamentals and overall market conditions.
Actionable Advice: Investors who are bullish on RIL’s long-term prospects may consider buying shares before the record date to be eligible for the bonus shares. However, it’s crucial to conduct thorough research and consider individual investment goals and risk tolerance. Don’t invest solely based on the bonus issue
